An equity investor learns early to distrust headlines and headline numbers. Revenue growth tells you little until you know how a company is governed, whether its accounts are clean, and how its managers spend the cash they control. It is a discipline we rarely turn on the countries in which those companies operate. In this essay, finance academic & former corporate strategist Les Coleman turns exactly that lens on the wealthy democracies of the West, and his verdict is unsparing. He also notes, in passing, that the decline he describes was not universal: it did not take hold, he writes, in countries such as “China and India that resisted its blandishments.”
Coleman’s article begins with some hard-hitting sentences. “If Western democracies were companies,” he begins, “they would be dismissed as lifestyle businesses whose managers (i.e. political leaders) run them to promote their own interests and wealth.” Leaders, he argues, “pursue projects that benefit the few, rather than national goals, and leave their countries with low economic growth, heavy debt and rampant white-collar crime.”
He traces the ailment to a single decade. At his first cabinet meeting as president in 1981, Coleman recounts, Ronald Reagan handed out copies of ‘Mandate for Leadership’, a 3,000-page programme from the Heritage Foundation that became the blueprint for neoliberalism: “a smaller state, industry deregulation, tax cuts, strengthened defence, and roll-back of social engineering.” Within a year the administration had adopted 60 per cent of its proposals, and The New York Times called it “the manifesto of the Reagan revolution.” The initiative “engaged Thatcher, and spread globally to dominate public policy in democracies around the world.”
To weigh what followed, Coleman borrows a tool from corporate finance, the structure-conduct-performance model. Applied to a country, it holds that “conditions are driven by the structure of institutions, laws and conventions; which drives the conduct or decisions of government, individuals and organisations; and that in turn leads to performance or outcomes.” Reagan and Thatcher, he writes, “asserted that unleashing markets and shrinking the state would ensure prosperity.” On his reading, they were wrong.
The promises, Coleman argues, “were mistaken because it brought only fragility to previously prosperous democracies.” The numbers he marshals from the rich OECD democracies since 1980 are at the heart of his case. Government debt “surged from 40 to 65 per cent as a share of GDP,” even as growth in GDP per capita “gradually slowed from nearly 3 per cent annually in the 1980s to barely 1 per cent today.” Deregulated credit pushed household debt to more than double as a share of the economy. “Quite obviously,” he concludes, “neoliberalism did not deliver on its promises of economic growth and increased personal wealth.”
There was, however, a clear winner. “The big winner from 50 years of neoliberal policy has been the finance sector,” he writes. As debt climbed and capital moved freely, financial institutions grew in size and political heft, and set up “a roughly seven-year cycle of market bubbles followed by crash and recession, which created super, unearned wealth for investor elites.” The middle class and below, meanwhile, watched home ownership and a comfortable retirement “drift out of reach, especially for Gen Y.”
For readers like us who spend their days assessing management quality, the most resonant section is the one Coleman rates the most damaging. “Probably the most powerful impact of neoliberalism has been on governance,” he writes, listing the failure to find weapons of mass destruction in Iraq in 2002, the 2008-09 financial crisis and the COVID-19 lockdowns as symptoms of the same weakened institutions.
Coleman’s diagnosis reduces to a sentence: neoliberal reforms “weakened the institutions on which democracy depends,” and the cure is “more democracy.” His essay is, at heart, a governance and capital-allocation critique of the state, built on the sort of question a long-term investor asks of any company: are the people in charge honest, accountable, and spending the resources well?
His remedies are where the essay turns genuinely contrarian. The first, “though it may seem counterintuitive,” is to “raise the pay of top government officials.” Base salaries for the leaders of most OECD countries sit below US$400,000, a figure fixed for the US president since 2001; “underpayment invites mediocrity and the entitled, and encourages corruption.” Voters who pay more, he argues, will demand better candidates, helped by fuller “disclosure of candidates’ assets and interests, as required for candidates in India,” and by devices such as the “democracy vouchers” trialled in Seattle to fund challengers.
He is quite critical about the two-party systems that dominate the Anglo democracies. Even as parties trade office, he writes, they “co-ordinate through continual exchange of ideas,” a duopoly that “stymies new directions and substantive reform.” He reaches for Noam Chomsky’s line that “the smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum.”
Coleman’s sharpest passage is on measurement and strikes a chord as the debate on GDP growth is currently simmering in India. GDP, the yardstick by which governments are judged, is “a dumb yardstick because it simply records the value of goods and services that have a price.” It rises with wars, disasters and ill health, and captures nothing of the value of free services such as the internet, of natural resources, or of unpaid work. The management truism that “what gets measured gets managed” applies to nations too, he warns, even when the target is pointless. He holds up New Zealand’s Living Standards Framework, which weighs wellbeing alongside wealth, as a model, and argues such balanced measures “should be a minimum standard for all governments.”
Behind the problem, he argues, sits a concentration of wealth and power. A 2025 US study found that “30-45 per cent of private contributions to presidential candidates come from the wealthiest 1 per cent of voters.” Citing the futurist Aldo Grech, who observes that “a very small minority has steadily rewritten the rules that govern economics, labour, housing, healthcare, media, and even attention itself,” Coleman’s answer is a progressive death tax to “limit its lifetime and stymie entrenchment of a hereditary ruling class.”
On how any of this might actually happen, Coleman is clear-eyed about the odds. He notes that in 2024 “voters around the world swung against the incumbent government in every developed country that held elections,” and likens the moment to the Roaring 1920s, another burst of technological and cultural change that ended in a crash and then in sweeping reform. Coleman puts his faith in mass protest, citing research that movements mobilising 3.5 per cent of a population “are almost guaranteed success”.
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