Now to the issue of balance sheet design. A Civic Capital Balance Sheet will serve our needs well if it captures ten primary elements: Basic Foundation, Infrastructure Essentials, Energetic Citizens, Capable Elected Officials, Honest and Professional Administration, Honest Tax System, Fiscal Responsibility, Responsible Jurisprudence, National Security, and a Capacity for Practicing Integrity at Scale.
The Basic Foundation
Over this nation’s long history, the American people have done much to lay down the basic operating principles of constitutional and democratic government. We have marked our spirit with iconic moments - The Declaration of Independence, the U.S. Constitution, the Emancipation Proclamation. We have accumulated a series of fundamental principles that testify both to our pragmatism and to our sense of principle. These principles are the first of the civic assets that belong on any nation’s Civic Capital Balance Sheet.
Government Rooted in Consent of the Governed. There was a time when the power to rule belonged to kings, emperors, monarchs, Caesars, czars. Some monarchs claimed the throne as a divine right, other simply seized the throne by force. No one imagined the power to rule as a privilege that could be granted or withheld by the people as a whole. How times have changed. Government founded on the consent of the governed is now the norm. Executives and legislators stand for election. Constitutions can be amended if a sufficient majority approves. Not only do the governed have the right and the power to turn a disappointing leader out of office; the governed also have the right and power to modify the constitutional order under which government is organized.
To Americans, these principles are understood, but not every nation has reached this point, not even today. Here is where I would begin a Civic Capital Balance Sheet.
Rule of Law. National cohesion begins with the rule of law; it is an essential element of civic capital. Laws must be fair, prosecutors must be bound by rules of evidence, judges must be bound by the law. Should an individual judge cross the line, a courts of appeal is responsible for setting things right. One scores “Rule of Law” by gathering answers, jurisdiction by jurisdiction, to the simple question: Is the rule of law alive and well? Are the police honest? The prosecutors? The judges? This, too, is a vital measure of civic capital.
Separation of Powers. An absolute ruler gathers all power to himself. He writes the laws. He levies taxes. He spends as he pleases. He controls all parts of the government, including the police, the prosecutors, and the judges. Civic capital is correspondingly gutted. A proper balance of powers can be created in a variety of ways, but however it is done, legislative powers, executive powers, and judicial powers serve a nation better when they are separated.
Achieving a proper separation of powers is a vital issue in the Islamic world as well, argues Noah Feldman of the Harvard Law School.[i] In an earlier day, Islamic societies vested legislative authority in priestly councils that interpreted the Q’uran as their way of writing laws. Executive authority was vested in the Sultan or the Caliph. It was understood that the executive had the power to implement the law, but not the power to write the law. This important Islamic tradition was swept aside during the Ottoman Empire, Feldman reports, when the executive abolished the legislature and claimed for himself the power to write laws as well as enforce them. Islamic nations today would be better off if they had a practical strategy for restoring a workable separation of powers.
Proper Charter of Powers, Proper Charter of Rights. Solid charters of powers and rights are an important civic asset. It is worth remembering that it took us some time to work out what we have now. The Constitutional Convention produced a document designed to create a new government and define its powers. But that wasn’t enough for the citizens and legislators of the original thirteen states; they insisted on having a Bill of Rights as well, guaranties that the rights of citizens would be recognized and protected.
The actual powers of government, it should be noted, fall into six or seven categories. Government has the power to raise funds through taxation. Government has the power to raise funds through borrowing. National governments also have the capacity to create money, a dangerous power but not an easy one to prevent. Government has the power to create operating programs – highway programs, post offices, police forces, prison systems, standing armies and navies and air forces, national parks, Social Security retirement insurance, and so on. Government has the power to subsidize. Government has the power to regulate. And, finally, one might wish to distinguish the power to appropriate funds on behalf of all the other powers.
Turn now to the rights of citizens. These too benefit greatly from having a charter that spells out a series of guarantees. In America the rights of citizens were set forth initially in the Bill of Rights – the first ten amendments to the Constitution – and have since been clarified and expanded in additional amendments and court decisions.
Both of these concepts are an important part of civic capital – a proper charter of powers, for government; a proper guarantee of rights, for individual citizens. The core notion here is that some nations do this well and some nations do not. In time, one can imagine Civic Capital Balance Sheets being drawn up not only for America but for other nations as well. Nations with proper charters of powers and rights will earn higher scores than nations which neglect this critical obligation.
Cultural Acceptance of Ballots, Not Bullets. Some countries adopt democracy as a form, but fall apart when major constituencies dislike their election results. Civil unrest sweeps the nation. Democracy counts for little when that happens. For the procedures of democracy to work properly, winners have to limit themselves to winning fairly, and losers have to learn to lose graciously.
Americans flunked this test in 1861, when this nation’s southern states attempted to secede from the union rather than accept Mr. Lincoln’s election. It took an agonizing Civil War to suppress the insurrection and hold the Union together. For decades and decades after, Southern whites nursed their antagonism toward the North. Only in recent years have new generations in the South begun to rise above the old certainties and acknowledge the moral wrong of slavery. Voluntary emancipation of slaves, not secession and war, would have been the South’s better choice. But human passions can run hot, and when they overheat too greatly, democracy itself can be undone.
A capacity for peaceful transfers of power is an essential civic asset. We too have gone off the rails; we too know the tragedies that calls to violence can unleash.
Universal Right to Vote. Americans now take for granted the idea that all citizens have a right to vote, women as well as men, people of color as well as those of European extraction. These gains were won only through years and years of popular struggle. Voting rights for women were not constitutionally guaranteed until 1920, and nationwide voting rights for African-Americans were not written into law until 1965. The cultural transition that accompanies such change is deeper and more difficult than we normally appreciate. It takes a gut-wrenching shift in loyalties, from the blood ties of tribalism to the more abstract principles of national citizenship.
Corruption-Free Elections. One might think corruption-free elections are a no-brainer. What nation can do without an election system that registers people honestly, helps them vote honestly, and counts votes honestly?
Yet in the real world, dirty things happen during elections. Conservatives regularly accuse Democrats of casting the cemetery vote. Liberals still condemn Republicans for stripping tens of thousands of black Floridians of their registrations just weeks before the presidential election of 2000. Election officials claim that computerized voting is tamper-proof, but it is unlikely that the public will ever believe them. Corruption-free elections are harder to achieve than one might think. And both parties are guilty of rigging election districts every chance they get, drawing zigzag boundaries that disrespect communities in order to create safe districts for candidates of one party or the other.
And yet honesty in every facet of an election is essential to the credibility of its result. At the end of the day, election judges have to declare a winner. And if the winner is to be accepted, the public has to believe the votes were honestly cast and honestly counted. This is a vital and dicey component of civic capital. The task of figuring out how to construct a reliable measure will be an interesting one.
Essential Infrastructure
Civic capital is not just a matter of constitutions and elections and the rule of law. Nations form governments in order to create and maintain a high quality public infrastructure.
Consider the following list of capabilities. All of them are essential to a smoothly-functioning modern society. Even in the world’s poorer nations, all these elements are surely on the shopping list:
- Honest police and courts
- Straightforward property law and property transfer
- Water & sewer facilities, waste & trash disposal
- Streets & highways, railroads, seaports, airports
- Parks and other recreational facilities
- Electricity
- Stable currency
- Lending institutions
- High integrity financial sector
- Business-friendly environment (for startups as well as established businesses)
- Doctors, clinics, laboratories, hospitals, drugs
- Medical care funding system
- Schools, colleges, universities, libraries
- Communications: Post Office, Telephone, Internet, Radio, Television
Try this as a thought experiment. Remove even one of the capabilities listed above. Can pre-modern societies get along with some of these elements missing? Most likely yes. But what about modern societies? Would modern societies be willing to omit any of these? It is difficult to imagine.
These functions can go unnoticed till they break down or disappear; in an instant, everyone sits up in alarm and demands that the missing functionality be brought back on line immediately. Infrastructure assets merit a strong place on any nation’s Civic Capital Balance Sheet.
Energetic Citizens
Some years ago, when our daughter was in fourth grade, I agreed to be local president of our Parent Teacher Association for a year. It was an eye opener. The volunteer energy that arises within our neighborhood is extraordinary. School carnivals. Wrapping paper sales. After school science tutoring. Potluck appreciation lunches for teachers. All the president has to do is cheer on the volunteers. Our little PTA grossed more than $20,000 a year, netted over $10,000 a year, and spent all that on helping children and saying a warm “thank you” to all the teachers.
The same bustle of volunteer energy is one of America’s brightest and strongest traits. It arises in so many parts of this nation. Everywhere one turns, one finds Rotary volunteers and Red Cross volunteers and teams of folks organizing 5K fundraisers and Walks for Hunger and on and on. America’s spirited volunteerism struck Alexis de Tocqueville back in President Andrew Jackson’s day and it is still a key part of who we are. I would put these traits down as a vital part of civic capital. The more actively they are expressed, the healthier a community’s civic capital.
Capable Elected Leaders
In any sensible balance sheet on civic capital, one ought to have a rating system for the quality of elected leaders. At first blush this might seem impossible. Won’t capable Democrats be detested by Republicans? Won’t capable Republicans be detested by Democrats? Who is impartial enough to create ratings that citizens of all persuasions might accept?
Such concerns are entirely legitimate. It won’t be an easy measure to construct. But it is a crucial issue. Good leaders are an important asset, bad leaders a serious liability. Ability counts, in both parties. If one goes at this properly, perhaps a decent rating system can be built.
Let’s imagine a genuinely impartial observer, someone who sees elected officials in operation and knows them well enough to recognize the presence or absence of personal qualities that set the truly competent apart from everyone else. Such an observer might look for elected officials who exhibit the following:
- Respect for evidence; a practice of looking at issues from many points of view; a practice of drawing upon a wide range of sources.
- Appreciation and tolerance for people of all kinds.
- Awareness of the full implications of a legislative decision. Prudence in writing laws. Resistant to Read-Fire-Aim carelessness.
- A capacity to learn from experience and grow in office.
- Appreciation for the common good, and a willingness to speak up in its defense, regardless of party.
Evidence. Respect for all constituents. Realistic appreciation of consequences. A capacity for learning. The common good as a recurring touchstone. Some Democrats have those qualities, some don’t. Some Republicans have those qualities, some don’t. A proper rating system is not beyond our reach.
Who should do the ratings? Not a small panel of “experts.” Instead, a cross-section of knowledgeable citizens. One might borrow the “360 Review” concept that’s taken root in the private sector. Literally thousands of people interact with a state legislature over the course of a year. With good sampling techniques, one can get a reliable profile of which public officials earn broad respect and which do not.
What we want, ultimately, are profiles not just of individuals but of legislative bodies as a whole. The goal is a rating system capable of saying, “X percent of Democrats in the legislature are of high quality, Y percent of Republicans are of high quality.” Then, over time, one watches the trend lines. If quality indices are improving, we will know something positive about the people who have been elected to write our laws.
Honest & Professional Administration
Government is only as good as those who run it. Some societies have strong traditions of professionalism and integrity. Others abuse their public servants and settle for inferior quality. Still others are so backward that government posts are viewed as opportunities to collect bribes and keep one’s family from starving.
On this broad front, five measures of civic capital deserve consideration.
The first is honesty. Is bribery frowned upon, or is it expected? Do public officials have their hands in the till, or is money honestly handled and transferred?
The second is professionalism. Are civil servants properly trained for their jobs, or do they have much too little education for the long-term demands of their work?
The third is courtesy. This often varies from one government department to the next, and even one clerk to the next, but a well-led government trains its civil servants to be courteous as a matter of principle.
The fourth is ease of use. This can be simple. I walk into the Motor Vehicle Administration to renew my driver’s license. I wait a few minutes. When I sit down with an examiner, she quickly calls up my record, gives me an eye exam, and takes my photo. We chat pleasantly for a few seconds, and almost by magic my laminated Drivers License appears, complete with my freshly taken photo. In less than five minutes, everything is done and I’m on my way out. I am amazed at how smoothly this agency now does business.
In other domains, an ease of use measure will expose enormous flaws. Consider the plight of hospital administrators, required by over-ambitious regulators to file dozens of different compliance reports every year. Nothing user-friendly about that.
Consider the tax code, which has ballooned to thousands of pages. Nothing user-friendly about that, either.
The fifth is growth. Civil servants have an important role to play in supporting our capacity for civic learning. They need to honor and respect the past; they also need to understand society’s evolving needs, and display a capacity for learning and continual improvement.
Each quality is a legitimate facet of civic capital – honesty, professionalism, courtesy, ease of use, growth. Those qualities that we measure, we can improve.
Honest Tax System
From the smallest of townships to the largest of nation-states, every government collects taxes. There are roads to be maintained, police to be paid, schools to be run, other infrastructure to be built and improved, armies to be supported. There are those who fantasize that government might someday be financed with bake sales, but reality says not. All citizens benefit in varying amounts from the services government provides, and taxation is the one method that ensures broad participation in funding the work of government.
Tax systems, though, come in many different flavors. Some are clear, relatively simple, and equitable. Some are convoluted, filled with special favors, and indifferent to principles of fairness. Some are easily complied with; some impose layers and layers of reporting burdens.
A proper Civic Capital Balance Sheet will rate tax systems on dimensions that capture their strengths and weaknesses. Simplicity will be a good; complexity will be a liability. Fairness will be a good; hidden favoritism won’t be. Ease of reporting will be a good; burdensome reporting will not be. Universal compliance will be an asset; widespread evasion will be a liability. Transparency will be an asset, opacity a liability.
Fiscal Responsibility
In the cynic’s view of contemporary America, Democrats buy votes by borrowing from China and throwing money at middle class programs, while Republicans buy votes by borrowing from China and throwing tax cuts at millionaires. No matter who wins, the national debt rises and America loses.
This is not just an American disease. All nations are susceptible. There’s a tipping point, I suspect, past which citizens are sufficiently short-sighted and politicians sufficiently venal that governments lose their fiscal backbone. Excessive debt weakens a nation’s currency and chases away lenders; eventually the economy collapses and a long painful regime of belt-tightening follows.
A prudent nation instructs its citizens in the perils presented by both types of demagogues, the tax-cutting demagogue and the free-spending demagogue. Prudent citizens insist on fiscally prudent government.
What do we suppose America’s credit score would be, were the tax-cutting excesses of Republicans and the spending excesses of Democrats to be assessed by global lenders? Not all that strong, I expect. Fiscal responsibility is a civic asset that can be quantified, in part, by looking at total debt as a percentage of total GDP. To see a nation’s fiscal conscience, though, one must assess as well the willingness of citizens to pay taxes, limit spending, and avoid long-run debt. Fiscal responsibility is a matter of cultural values as well as a matter of fiscal practice, and somehow that insight needs to be incorporated into the scoring.
Responsible Jurisprudence
One cannot assess civic capital fully without evaluating the quality of a nation’s jurisprudence. This will not be an easy matter. In some nations, judicial systems are guided by case law, as in America; in other nations, they are guided solely by the wording of the legislation.
In this nation, there is a movement that claims American jurisprudence has deviated from the true and original meaning of the Constitution, and it is time to staff the nation’s courts with judges who will enforce the Constitution’s original meaning.
As students of history know, our Constitution was a sturdy compromise crafted by flesh-and-blood human beings who debated its design principles long and hard over the course of a Philadelphia summer. The document they created deserves enormous respect, but the rigid notion that there is only one right way to read the document goes beyond the bounds of common sense. Something else is afoot.
There is an ulterior motive to this movement. It seeks to control America’s civic and economic future by controlling the evolution of judicial precedent. The rights and privileges of the strong are to be strengthened, the rights of the weak to be undermined. As a practical matter, the so-called federalist movement is little more than the judicial wing of Gated Capitalism.
A less partisan reading of the American tradition recognizes that as a nation we always have two competing sets of priorities. On the one hand, we favor sufficient concentrations of power in government and in business to advance our national goals. On the other hand, we want individual rights defended, both from the excesses of government and from the excesses of business.
The tradition of protecting individuals from the abuses of excess power has flourished more easily in the civic and political arena, thanks to the Bill of Rights. Nothing like the Bill of Rights guarantees that citizens will also be protected from economic abuse. Such protections as we have rise and fall according to the sentiments of the Congress.
Even so, our central philosophy is clear. Grants of great power to the strong are to be balanced by protections for the weak.
A judge who always creates precedents that favor the powerful can hardly be counted as a defender of America’s central constitutional tradition. Quite the contrary.
An appropriate Civic Capital Balance Sheet will give high marks to a judiciary that balances the powers of the strong and the rights of the weak.
National Security
A nation that has poor relationships with other nations is a weakened nation. A nation endangered by serious enemies has quite a hole in its balance sheet. National security is partly about good relationships with others, and partly about threats that can be controlled or deterred. National security is multi-dimensional, a critical aspect of civic capital. For America to earn a strong asset rating, several conditions will have to be met.
First, and most importantly, long-run social trends in the larger world must be favorable. Anti-American extremists are more of a threat when prospective recruits are available in large numbers, not so much of a threat when the supply of potential recruits is drying up. If larger social trends are running in America’s favor, an important cluster of threats is in decline.
Second, America’s capacity to develop respectful and vigorous relations with other nations must always be strong. As a people, we make up less than five percent of the world’s population. Almost everything that boosts our security will happen as a result of good relationships with other nations.
Third, long-run institutional trends must point toward the common good. Climate change that runs amok will create an exceedingly dangerous world; only by phasing in clean energy at the swiftest feasible pace can these threats be contained. More broadly, firms that comply with the Five Zeroes Sustainability standard must in time replace those that do not. A global economy that uses resources responsibly and preserves them for the long haul will be much safer.
Fourth, long-run trends globally must point toward the complete control and timely elimination of nuclear weapons in every country. Nuclear war, as President Reagan reminded the world, cannot be won and must never be fought. In a multi-polar world, a nation that possesses nuclear weapons is less secure than a non-nuclear nation, because its own nuclear capabilities turn it into a prime target for other nuclear powers. Nuclear weapons survive today not so much for strategic reasons as for reasons of bureaucratic inertia and corporate profit.
Fifth, national security for America is in part a function of America’s financial stability and institutional vitality. A nation that cannot manage debt responsibly becomes an insecure nation. A nation that cannot renew outdated institutions becomes a backward nation.
And, of course, national security is also a function of a strong military. But military strength alone isn’t enough. A nation that fails to promote the other elements of national security puts its soldiers at unnecessary risk. Throughout the Cold War and even into the present, America has underemphasized the non-military dimensions of national security.
All six elements are part of national security, and, in turn, key elements of civic capital.
A Capacity for Practicing Integrity at Scale
As with environmental capital, human capital, and economic capital, civic capital is not static. Civic well being partly depends on adaptive competence, an ability of a nation to renew itself as its circumstances change. A few simple questions can help with profiling this capacity:
Are the people of the nation committed to protecting the nation’s competence as a self-governing republic?
Are the people of the nation broadly committed to the national interest and the well being of the nation as a whole?
Are the claims of special interest regularly tested against integrity as a standard?
Does the public share a capacity for collaborative dialogue?
Does the nation have an infrastructure for keeping track of society’s core assets and making its findings widely available?
Does the nation make a point of accurately understanding behaviors at scale and the consequences they produce?
Does the nation have a proven capacity for discovering effective solutions, at scale, and implementing them effectively?
If the answers to these questions are generally favorable, then it is likely that America (or any nation) takes seriously the challenge of self-government in today’s complicated modern world.
Let’s imagine that this is a path that we favor. We learn to see every society both as a collection of operating sectors and as a collection of core assets. We recognize the vast replication powers that many sectors possess. We begin to understand that we live in a cause-and-effect world, and that ill-chosen behaviors often generate harmful consequences.
(19.2 Version 2011-06-27)
[i] Noah Feldman, Harvard Law School. Public address given at St. John’s College, Annapolis, Maryland. October 24, 2008.
