Jamie Whyte is a philosopher turned management consultant whose books – including Bad Thoughts – dissect flawed reasoning. Whyte is leader of the free market party ACT in New Zealand. Below he discusses the possible future of democracy, the power of the English legal system, and why freedom of movement is the surest sign of good democracies.

Do you think democracy will be a flash in the pan of history? If so, what do you think will succeed it?

I think the way to answer that question is to note that all systems of government are ultimately democratic in so far as the sovereign power is accountable to the people. It may be messy, it may be that the people overthrow the monarch, but there’s always some level of accountability. Even in the medieval period, there was the notion of kings who ruled with the consent of their people, and those who didn’t were considered tyrants.

What we have today is a democratic system that avoids the need for bloody overthrows: you get a vote and its all very systematic. But there’s no reason to assume that we wont get quite a different system of democracy in the future. I don’t know what it might be, I don’t do that kind of prediction stuff. However, one reason to think that there may be some change is that countries which are not very democratic by our standards – China is a perfect example, and perhaps Singapore – have been economically successful without obvious signs of massive discontent amongst their populations.

If nations that are not democratic economically outperform those that are, and people move, their capital moves too, and that might put pressure on countries that are democratic to change and reform. If democracy does change, I think it will be through such economical global cultures.

How do you think you can judge a democratic system? Is it only through economics?

Actually the best way to judge the test of a system is through migration. Do people want to move out and do people want to move in? The most obvious indictment of communism – Soviet-style communism – was that they wouldn’t let people leave. If you have to lock your people in there’s obviously something wrong with your country, there's no need to discuss it further.

Look at America. Despite the complaints, people queue up, desperate to get into the country. That is the best measure, and that’s why we need to keep freedom of movement around the world. I don’t like strict migration controls because one of the side effects of it is that it lets governments off the hook. Although this isn't always the case, I sometimes think it is their intention. You lose any measure of whether they’re doing well.

Interestingly, if you look at Britain – and I’m not quite sure what this means – a lot of Brits leave and a lot of foreigners come in. I'm not quite sure why. Maybe people just discover that living in Britain doesn’t really suit them and that living in another country suits them better and that’s all there is to it.

Perhaps our PR is better than our reality….

You mean that once you get here you’re suddenly terribly disappointed? Actually, that may be true. People may imagine that there are more opportunities here than there actually are. Though I don't see how that could be sustained over a long period of time, because people talk to each other. Imagine a Pole comes to Britain and discovers its not the land of milk and honey. Surely, he’d tell his mates and they won’t come. So I guess that’s not the answer.

I would guess that the answer is related to different points of economic development. If you're a middle or working-class English person with the chance to move randomly to New Zealand, that might be an attractive option. You would be able to materially improve your standard of living, perhaps you'd have better career opportunities. If you’re from Bulgaria, you're looking to get ahead economically, so you want to be in a place like England. So, I suspect it's not much to do with democracy, rather that being in different places suits people at different points in their economic development at different ages. For example, retired people moving to Florida.

Anyway we should get back to democracy.

So, would you say all of that’s just noise that’s getting in the way of the data that we have about the political system, about migration?

No, no, no! I think the fact that the British population is rising through migration is a sign that, comparatively at least, Britain is an attractive place to live. It's something to be proud of. People get very upset about migration, but it’s a sign that this is a good country. Nobody ever wanted to move to the Soviet Union or to Saudi Arabia unless they’re on a short term contract, so I think it’s the best measure.

But it’s also good because it’s competition between governments, and competition between governments means that people can’t over-exploit their domestic population. If people are free to move and go to a jurisdiction that suits them better, it means that jurisdictions have to be well designed. This is particularly important in business. One of the great virtues of Britain, and one of the reasons it's a rich country and London is a major business capital, is its wonderful legal system. People want their contracts to be drawn up in London, they want their disputes to be dealt with in the London courts. So Britain wins that competition and that’s a great thing.

What is so wonderful about the English courts? Are we substantially fairer?

No legal system gets business if it’s biased, because then it's only attractive from one side. A legal system will only work if all parties are happy to submit to it, so it will only work if it's not biased. Also, of course, it's partly historical. Contract law was largely developed in England and then transported around the world through colonisation. It's a system that people all over the world trust more than any other.

What's particularly interesting is that the English legal system has emerged over time, it has evolved throughout history by precedent. It’s not a designed system. Designed systems tend never to be as well adapted to society as evolved systems, and that’s one of its virtues. In fact one of the virtues of British life is that it is an evolved system as opposed to a designed system. France is the most designed society.

In what sense is France the most designed society?

They had a rationalistic model. Expert, knowledgeable-type people could plan the way that society would be arranged, and this would be the thinking after the French Revolution. Whereas Britain has always followed an organic or evolutionary approach where you let things just... no one plans it, it just grows out of the different forms of living. It's inconsistent, it's higgledy-piggledy, but it works.

Like our cities?

Exactly. Paris is a planned city. London is just a bunch of villages that blended up, and to my taste at least, I prefer the London outcome. It emerged because it suited people’s tastes and reactions in their local areas, whereas the French approach is that you get a design that fits the desires of the elite and is imposed. The British way emerged out of the inconsistent, different approaches of many different people and that’s what produces a very varied society.

And that’s quite a good metaphor for democracy itself, sewing the higgledy-piggledy views of the many together rather than just the elite?

Well, provided you’ve got local democracy. If you’ve got centralised systems of democracy and representative systems of democracy what you tend to get is great bureaucracy in the centre, like Whitehall, prescribing the right outcomes all around the country. Whereas if you have local governance, you get outcomes that suit the local people, so I regret the relative decline of local government and the rapid rise of central government.

In fact Thatcher’s very responsible for that, and though I'm not hostile towards her the way most people are, I think that was a big blunder. I think British local governments should impose income taxes.

Really?

Yes, because then you can engender competition between local governments. If corporation taxes were low, for example, think about what would happen if you could just say: “I think you're charging me too much tax here. I'm going to go to Manchester.”

But then we’d end up paying too little tax and our national services would go down the pan..

But then again we don’t want central social systems.

Not even the NHS?

Did you know that the NHS is the biggest employer in Europe? It’s the biggest single employer in Europe, and that’s part of its problem. It’s gargantuan. Even if you want tax-funded healthcare, it would be much better to have lots of smaller NHSs, and then people could make the trade-offs that suit them.

At the moment there’s widespread dissatisfaction with the whole system. People feel that they don’t have control over it, and this is because it's largely centralised. You want decision-makers to be closer to the effects of the decisions.

Is there not then a trade-off between closeness and efficiencies of scale?

There is that trade-off, but scale efficiencies are usually maximised. You get all the benefits at relatively low scale, and then what happens is you get bigger and bigger and bigger you get dis-economies of scale because, as you get really big, all kinds of things start to go wrong: you need extra management to cope with the size; the senior management can’t see what’s going on at the bottom and make wrong decisions. Beyond a certain scale you get more problems than benefits from economies of scales.