The United States of Trial and Error

“American democracy is in danger.” You’ll hear this argument from both sides of the political spectrum these days. The Left will warn you that Donald Trump, if elected, will turn America into a totalitarian state, usurp the judiciary and indulge in crony economic practices all too familiar to many developing countries. The right will warn you that if Kamala Harris is elected, we will descend into an Orwellian state in which the mainstream media pushes a woke narrative aimed at destroying American values ​​and way of life, fueled by waves of uncontrolled immigration.

But when you focus on the comments made by the candidates and their most vocal supporters online, it’s easy to forget the bigger picture: that America is—and always has been—what I like to call a trial-and-error (T&E) democracy .

A trial-and-error democracy is a system that has ongoing incentive to change and improve. This process is not automatic; it is a product of conscious social action. When we observe dysfunction in modern democracies – such as political gridlock, corruption, vote buying, interest group takeover of the state, media takeover, etc. – these are periods of error that we must endure before we can move forward to a fairer and more prosperous one achieve social results.

Consider the state of the country in the 1960s or 1970s. In the 1960s, President John F. Kennedy, one of the most popular presidents in history, was assassinated, as was his brother Robert Kennedy five years later while attempting to run for office on the same platform. Two prominent civil rights leaders, Martin Luther King and Malcolm X, were also assassinated. Racism reached its peak 100 years after the abolition of slavery (Ole Miss riots and the rise of George Wallace are just a few examples) when the KKK brutalized African Americans in the South. Furthermore, nuclear war was a constant threat at the height of the Cold War in the 1960s.

On the geopolitical front, America lost the war in Vietnam, signaling that it was no longer the military superpower it was 25 years earlier. The country was ravaged by anti-war protests that left tens of thousands of young Americans dying for nothing and leaving many more scarred for life. U.S. foreign policy has been disastrous, particularly in the Middle East (think of the Iranian Revolution or the Yom Kippur War, both of which led to major oil crises), not to mention a series of proxy wars and CIA-directed regime changes, a mistake be for yourself.

The economy experienced stagflation for almost a decade, a period of double-digit inflation, high unemployment and low growth for which the most eminent economists of the time had no solution. In fact, many of them predicted that it was only a matter of time before the Soviet economy overtook the US economy. Not to mention the announcement of the end of the US dollar as the global reserve currency.

With regard to inequality and social mobility, the 1960s were often exemplified in the inequality literature by high tax rates and low official inequality figures; African Americans and women were still treated as second class citizens, not to mention other minorities. This was not an equal society, even if the income differences were smaller. Political polarization in Congress was less? Yes, because Congress was almost entirely white men.

And yet “the US empire” did not collapse. On the contrary, in the following decades the country grew faster than ever before, both economically and in terms of social progress. Why? Because it has learned from these mistakes.

There is no doubt that we are currently in a period of economic and geopolitical problems, unlike those of the last 30 years (with the exception of the 2008 crisis). We’ve been here before, not just in the ’60s and ’70s, but much worse in the ’30s and ’40s in the West in general, or in the 19th century. But what distinguishes the West from all its historical predecessors and modern counterparts are precisely its trial-and-error democracies, protected by politically and economically inclusive institutions. No matter how bad you think things are, periods of failure ultimately lead to periods of success. And each new period of failure does not downgrade societies to the previous period of failure. Social improvements and more inclusive institutions are irreversible. While coming out of a time of error is by no means automatic, it happens as long as people demand change and progress. Gradually, as always. There is no magic bullet and no quick fix.

Read more: DEI doesn’t work. Inclusive economics could be

The problem, however, is that voters rarely think that way. They all want quick solutions. When bad things happen, when the system seems weak, corrupt, absurd, hijacked by special interests, or simply unfair, people will actively seek alternatives. They will, for example, praise the stability of right-wing autocratic regimes or rethink socialism under new paradigms, both of which offer seemingly simple, easy and quick solutions.

This is all an illusion.

We saw this a lot after the 2008 crisis. In the 2010s, as Europe teetered on the brink of collapse and the US went through various periods of social unrest with the #metoo or BLM movements, the appeal of strongmen at the top of autocratic regimes became all too obvious. But that is pseudo stability. On the surface they exude strength, but inside they are rotten to the core. When a strong leader is overthrown, the entire system quickly collapses. We have seen this happen again and again in every single autocratic system with the first signs of instability.

The USA and the Western model of trial-and-error democracy in general are the exact opposite of this. It is what Lebanese-American mathematical statistician Nassim Taleb calls “antifragile.” T&E democracies appear to be more fragile, but it is this consistent tinkering that provides strength in the long run. Every ability known to man is a product of trial and error. Practice, make mistakes and little by little you will become a master. Nothing happens overnight and not a single lasting success in human history has ever come quickly. But we always seem to want quick and easy ways. It just doesn’t work that way.

Given the usual trial-and-error process in the US, what can we expect from whoever wins the White House this November? For one thing, it’s time to move beyond simple, party-based solutions and look at the bigger picture. A trial-and-error democracy benefits from changing incentives, not from enforcing unsustainable policies.

Consider, for example, the issue of economic inequality. Inequality is not an artifact of a particular economic system, but a man-made phenomenon that is deeply rooted in the often violent pursuit of political power. The real problem facing America today is not differences in income due to innovation or talent, but differences in outcomes due to proximity to power. This is expressed through elite networks – informal relationships between politicians in power and owners of capital or business leaders. Through my research, I have empirically confirmed that top executives with political connections receive much higher salaries than unconnected executives within the same company. This is the main reason for the inequality of the top 1% and the top 0.1% of income earners. The problem is exacerbated when established elites abuse their power to gain access to privileged information or opportunities, or when they seek political protection.

To understand this, we need to move beyond one-dimensional policy solutions like taxation. Taxing the rich only deals with the consequences. A top executive will benefit from proximity to political power regardless of his highest marginal tax rate, especially if he can easily abuse loopholes (which is precisely why loopholes exist).

Read more: To combat inequality, America must rethink its economic model

To truly reduce inequality while increasing the strength of domestic democratic institutions, America would benefit from a presidential administration that shifts power from centralized systems back to citizens and the community. In fact, we can suggest a number of measures that would do just that; From implementing full budget transparency at all levels of government to introducing rules-based KPIs for officials. It would not be difficult to define precise KPIs, for example for fiscal policy (a constraint on budget deficits and debt that punishes Congress and the incumbent administration, similar to the 2012 fiscal cliff) or monetary policy (inflation and/or unemployment targets). (related to the mandates of FOMC members), or climate change, or health and education outcomes.

Other paradigm-shifting measures involve removing many decisions about the distribution of public goods from the bureaucracy and allowing citizens to participate more directly in shaping their local budgets, thereby directly determining where part of their tax revenue should go. The aim is to gradually encourage people to initially care more about their local communities. Commitment at the national level should then take place gradually.

Such reforms develop massive second- and third-order effects and only realize their benefits after a gradual accumulation of democratic capital. The end result is more trust, better choice in politics, fewer incentives to form elite networks (as we reduce political power), and consequently lower inequality.

None of this is easy to implement. But starting now, in a time of error, would ensure that we take full advantage of the time of discord and build an even stronger and more inclusive democracy for the next generation. Whichever government recognizes the opportunity such reforms could bring will cement a long-lasting legacy.