Epidemic disease and the state

The United States is reeling from two shocks. A novel epidemic disease is spreading largely unchecked. Protests that began in response to the killing of George Floyd have taken on a life of their own. Similar protests have also roiled other Western countries, such as the UK, where issues of racialized policing and police violence are quite different. There is a growing crisis in the relationship between the state and society that has been uncovered by the pandemic.

This is partly a crisis of state effectiveness. Why have some societies struggled in response to Covid-19 whereas others have seemingly excelled?

Many East Asian societies such as South Korea, Taiwan, Singapore, Vietnam, and Japan appear to have weathered Covid-19 relatively successfully, as have New Zealand and Australia. Other societies, including those in the liberal West, like the UK and United States, as well as places like Brazil and India have seen both slower responses and higher death tolls.

Why? And what does this tell us about what makes an effective state? Answering this question requires the concept of state effectiveness or to use the term popular in the academic literature, state capacity.

State capacity refers to the ability of the state to enact and enforce its policies. It is often broken down into two components: fiscal capacity – the state’s ability to raise revenue via taxation without mass evasion – and administrative or legal capacity – the ability to create and enforce its rules. Fiscal capacity matters because a state needs revenue in order to operate. Administrative or legal capacity matters because it is what allows states to actually operationalize their policy goals. While the analogy is not perfect, in a meaningful sense state capacity can be thought of as a form of capital: it requires investment to build, and it can easily deteriorate and corrode.

Do current events reveal a marked deterioration in the capacity of Western states and societies? There have long been those who saw Western institutions and societies in decline. Many “declinist” accounts in the past have proven to be alarmist or overly pessimistic. But is this time different? This essay will discuss what constitutes an effective state. It does so through the lens of the state and public health.

At the outbreak of the crisis in January, the lockdown of Wuhan was viewed as the kind of draconian policy that only a dictatorship was capable of. Western governments, in contrast, were slow to resort to authoritarian measures. The United States and some others issued a travel ban on flights from China. But flights to and from Italy – which soon became the central European node of the disease – continued.

In contrast to Israel, South Korea, and Singapore, other Western governments initially took few or no measures beyond advising people to wash their hands more frequently. There was no urgent scaling-up of testing capacity or massive investment in PPE. This attitude was particularly evident in the UK, where the British government did not force the English Premier League to stop games or restrict public gatherings, and politicians and public officials gave contradictory and confusing advice. All this changed in late March as nearly all Western countries, with the exception of Sweden, imposed draconian lockdowns that are only now easing.

Liberals believe we should be wary about imposing such massive restrictions of individual freedom. And they express understandable concern that by responding to the disease, we risk losing our liberties, if the initial crisis persists indefinitely. This prospect is particularly troubling if there is a trade-off between public health and liberty. Here it is useful to take a historical perspective.

Smallpox and the state

Is there a tradeoff between freedom and health? This question is the theme of Werner Troesken’s The Pox of Liberty. Troesken, who tragically and prematurely passed away in 2018, describes precisely the possibility of such a trade-off and discusses how it can be mitigated in his final book.

The premise for such a trade-off is simple. Individual actions are insufficient to control the spread of an epidemic disease, particularly in a large-scale, dense, urban environment; the externalities are simply too large and costly to measure and apportion.

Local and city governments may also not be able to internalize them. Central government is best placed to implement policies of containment, quarantines or compulsory vaccinations. These policies, however, often require trampling on individual rights and freedoms.

In The Pox of Liberty, Troesken’s focus is on smallpox, typhus, and Yellow fellow – the three big infectious diseases in 19th century America. The puzzle is as follows. By the early 20th century the United States had the largest and fastest growing economy in the world. But even as Americans became rich, health outcomes, particularly with respect to infectious diseases lagged.

In 1900, the United States had a smallpox death rate 31 times greater than Denmark’s or Canada’s. The Soviet Union eradicated smallpox before America did. According to Troesken, often “the United States lagged in the eradication of these infectious diseases not despite being rich and free, but because it was rich and free”.

Studying smallpox, Troesken shows how America’s Federalism permitted local variation in the nature and enforcement of mandatory vaccination policies. In states with weak legal enforcement of vaccination laws, smallpox incidence was ten times higher than in states with strong enforcement. In the case of smallpox and other highly infectious diseases, a stronger central government capable of mandating and enforcing national vaccination policies would have resulted in fewer deaths. This is the tradeoff between liberty and public health.

Across countries, Troesken finds an U-shaped relationship between GDP per capita and smallpox rates in the late 19th century. Poor countries like China, Algeria and Egypt had the highest rates of smallpox. Rich and free countries like the United States, Switzerland, England, and the Netherlands had intermediate rates of smallpox whereas more centralized, relatively middle income states that had embarked upon compulsory mass vaccination programs like Sweden, Denmark, and Germany had the lowest rates of smallpox. On recent polls as many as one third of Americans claim that they will not avail of themselves of a vaccine for Covid-19.

These innovations, particularly in the area of vaccination, saved untold numbers of lives. But it is also true that the battle against epidemic disease gave license for far greater government intrusion in the lives of ordinary Americans.

Indeed the germ theory of disease was criticized by American public intellectuals at the time in these terms. Troesken quotes H.B. Anderson, the author of State Medicine: A Menace to Democracy, as saying that: “the germ theory has been the basis of numerous laws, rules and regulations antagonistic to personal liberty”. And while their specific fears of the smallpox vaccination were ill-founded and cost lives, their more general fears had a firmer basis. The American medical establishment did abuse its powers – for instance in forcibly sterilizing and experimenting on certain populations, notably African Americans.

One does not have to endorse these views to acknowledge that, to some extent, the tradeoff was real. It is easy to see the anti-vaxxers as misguided, but the same individuals who opposed smallpox vaccinations campaigned against mandatory sterilization laws for criminals or the “mentally unfit”. The late 19th century opponents of vaccination did not use the language of liberty disingenuously.

The trade-off between health and freedom is hardly inexorable, however. It can be bent, and has been. In the long-run, American wealth and freedom became important inputs into scientific research and economic growth that enabled American universities and research centers to become the best in the world. Open ended scientific research flourished in liberal societies.

It can also be bent by having a more effective, though not necessarily larger, state. Such a state might take on intrusive powers for the duration of the crisis, but not retain or misuse these once the crisis had abated. Or, by being more effective, such a state might not need to be as intrusive. This might seem fantastical. But societies that responded faster to the epidemic have been able to lift restrictions on individuals and businesses more rapidly than those that like the US, UK or Brazil, which were slow to respond.

Another way states can bend this trade-off is by being less intrusive but more effective. The South Korean government reacted very rapidly in scaling up testing and implementing a rigorous contract tracing policy. Infected individuals were confined in government quarantine. In contrast, the United States botched the introduction of Covid-19 tests – where the original tests were faulty and, initially, were only available to a small number of individuals who had recent travel history from China. The Federal government abdicated responsibility to the states whilst playing favorites between governors. Widely available information about non-symptomatic individuals spreading the virus was denied by public officials.

The response in the UK was also bumbling – major sporting events took place into the middle of March 2020 alongside an tragicomic volte-face on the effectiveness of medical masks, which were initially derided as ineffective, before becoming mandatory on public transportation and in shops months later.

The result of such missteps is a reduction of public trust in alleged experts and politicians and this decline in trust contributes to the overall decline in the effectiveness of the state.

What makes a state effective?

The concept of state capacity first attracted attention from development experts in the context of the East Asian miracle in the late 20th century.

Scholars coined the term “developmental states” to describe the governments of South Korea and Taiwan. Economists asked themselves why it was that South Korean could seemingly implement a successful export-led development strategy whereas countries in South America or Africa failed dismally.

Simplistic answers such as “democracy,” “free markets,” or “a lack of corruption” didn’t cut it as South Korea only became a democracy in the 1980s, pursued interventionist policies, and has had plenty of well documented problems with corruption. Singapore, another successful developmental state, remains non-democratic.

Ex ante, few observers expected South Korea to develop rapidly; in the 1960s development experts thought that ex-colonial states in sub-Saharan Africa had better prospects. Ex post, the deciding factor appears to have been the ability of the Korean state to invest in human capital, limit rent-seeking, and make strategic investments in industry. This ability is what we mean by state capacity.

But how much does the concept of state capacity explain here? To answer this, note that state capacity does not refer to the size of the state. Government spending in South Korea at 32.8% is significantly less than in the UK’s 39.3%. Nor is it a measure of state power.

No one doubts that the United States military can blow any rival out of the skies. In many respects the capacity of the American state remains enormous. No other government in the world commands the resources that the United States does. But elements of the mighty leviathan that is the United States government look decidedly creaky. It is well-documented that under the Trump Administration, the State Department is hugely understaffed. Similarly, the Council of Economic Advisors currently has one member. But this is not simply about the Trump Administration. In 2013, under the Obama Administration, it proved incapable of setting up a website for the Affordable Care Act, when a total of six people succeeded in signing up on Healthcare.gov on the first day due to login problems and other delays. A similar lack of capacity underlies the impossibility of building cost-effective infrastructure in cities like New York.

As Covid-19 began to reap havoc across the country in Spring, particular attention was directed at the incompetence of the FDA which devoted its energies to blocking the importation of masks and to (temporarily) banning an innovative Covid-19 testing program launched in Seattle.

For those on the left this is a story of austerity and the stripping back of essential government services. However, the budget of the CDC has grown much faster than inflation since 1987; in fact funding for the CDC has grown proportionately more than other government spending.

The problem is not the budget, but where the budget has been spent: fancy office buildings with saunas and fitness centers rather than on researching infectious disease. The budget of the FDA has grown more than 6 times in real terms since 1987 from $590 million to more than $8 billon. These examples speak to a severe form of state incapacity despite an abundance of resources and talent. The United States displays an extreme case of this pathology but the disease is evident in other developed states too.

Maintaining state capacity

How do states build or lose capacity? It is impossible to give a full answer here. Clearly, rent-seeking is a major impediment to state effectiveness.

One reason for the ineffectiveness of the Affordable Care Act was that insurance companies needed buying off. Agricultural interests have long been successful in lobbying politicians and the result is that almost all rich countries have inefficient agricultural policies. The bumbling response of the United States to Covid-19 is partly a reflection of these deeper pathologies.

But this does not explain why some societies are more prone to the bureaucratic pathologies diagnosed by Public Choice scholars than are others.

Mancur Olson argued that in any long-lived democracy over time interest groups would become sufficiently organized to clog up the economy and make it sclerotic. His analysis was inspired by the disastrous nature of the British economy in the 1970s prior to the Thatcher reforms. In contrast, for Olson, West Germany was successful because it had begun the post-World War Two period without entrenched vested interests.

Missing perhaps from much of the literature on state capacity is the role of civil society.

States are most effective when they are complemented by civil society.

This initial neglect is remedied in a recent book by Daron Acemoglu and James Robinson – the Narrow Corridor. For Acemoglu and Robinson, societal development requires both the building of state capacity and the rise of civil society. They argue that in the absence of a state, there is a Hobbesian “War of all against all”.

But a state that is too strong relative to civil society will be an oppressive Levathian. In either situation economic development is unlikely to be sustained or long-lasting. But within a “narrow corridor” where state and society are balanced it is possible to achieve a flourishing and liberal social order. Moreover, within this corridor, Acemoglu and Robinson contend there is a virtuous cycle in which the development of a more powerful state is complemented by the rise of strong civil society.

Thus growth in the power of the state can induce increased organization and activity by civil society which can check or prevent abuses of state power. When civil society is aligned with the state – as often occurs in times of war – states will appear much more effective than when there are tensions within society and between the state and society. Negative spirals are also possible: declining state effectiveness reduces trust in government and in society more generally.

It is possible to discern this dynamic in the Covid-19 crisis. East Asian societies were initially most successful at responding to Covid-19 because civil society in these countries also responded, and in the case of South Korea and Taiwan this made draconian lockdowns unnecessary. Germany too appears to have weathered this crisis with trust in their government high.

In contrast, in the United States the concern is that just at a time when society needs to come together to face a epidemic and an economic crisis, fractures within society have burst open. Though there have been promising signs recently – including President Trump wearing a mask – during May and June it looked like mask wearing was about to become the latest political dividing line between left and right, politicizing the one apparently effective, low-cost measure individuals can take to mitigate the spread of the disease.

But perhaps the problem is deeper. Olson’s views about entrenched interest groups suggest that it will be hard to rebuild the capacity of Western states and societies. In fact, taken slightly further his arguments suggests state capacity may be cyclical. It is precisely the success and longevity of rich Western countries that has made them fat with rent-seekers. Newly rich countries like South Korea are further back down the path to state ineffectiveness.

This viewpoint is hardly revolutionary. Ancient writers such as Polybius and Tacitus thought that political virtue, as they conceived it, was cyclical. David Stasavage found that self-governing medieval city-states initially outgrew their non-independent peers for about two centuries but that in the long-run this growth advantage reversed itself, as they became captured by rent-seeking interest groups.

This observation about the potentially cyclical nature of state effectiveness brings to mind the recent writings of Peter Turchin.

Turchin is famous for, with Jack Goldstone, developing a structural demographic theory of historical cycles. Turchin predicted prior to 2010 that the 2020s would see unrest and violence in the United States and other Western Countries. These predictions were based on three trends. The first two: slowing growth and accelerating inequality have been commented on by many others; the third, however, an overproduction of elites, may prove to be the most important of these trends. Turchin in his Age of Discord outlines the consequences of elite overproduction as follows:

The presence of more elites than the society can provide positions for, is inherently destabilizing. It reduces average elite incomes and increases intraelite competition/conflict because of large number of elite aspirants and counter-elites. Additionally, intraelite competition drives up conspicuous consumption, which has an effect of inflating the level of income that is deemed to be necessary to maintain elite states. Competition plays a role in the unraveling of social cooperation norms.

Elite overproduction, on this theory, is a key driver of political instability and declining state effectiveness.

Throughout history, societies have been afflicted by epidemic disease. And not all of these episodes have had lasting impacts on their respectives societies. It is much commented on that the Influenza Pandemic of 1918 had little lasting impact on popular culture or on institutions. Coming on the heels of World War 1, its effects were absorbed by the more general shock of the war itself. Similarly, until recently episodes like the 1957-58 flu pandemic or the 1968 flu pandemic were obscure and almost forgotten. Even the episodes of typhus, yellow fever and smallpox studied by Troesken appear to have local rather than national effects in 19th century America.

Yet some epidemics have had huge consequences. Ancient historians such as Kyle Harper credit the Plague of Cyprian as playing a key destabilizing role in the Roman empire’s crisis of the 3rd century. One reading of Thucydides is that the pretensions of democratic Periclean Athens are exposed by the horrors of plague. The Black Death had a different but similarly calamitous impact on medieval society and faith.

This is not doom mongering. Rather it is a call to better understand how to strengthen both the bonds of liberal society and restore the effectiveness of the state.

It is too early to tell whether the effects of Covid-19 will be as wide-ranging. Much depends on the speed at which either a vaccine develops or the virus mutates in a more benign direction. But if the Spring and Summer of 2020 are to go down as a watershed in the history of the West, it will not be because of the effects of the disease itself. It will reflect the interaction between the effects of the pandemic with underlying weaknesses and pathologies in Western states and societies.