Sebastian Mallaby
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much o a good thing can sour the public
on the project o an open society. Like-
wise, trade and technological progress
are the drivers o prosperity, but their
beneÃts must be weighed against the fact
that citizens resent upheaval. A system
that permits Ãnanciers to price and insure
risk should serve economic growth,
yet such a system can collapse under
its own weight, with society suering
the consequences.
Liberalism, in other words, should not
consist only o fealty to liberty, equality,
and fraternity, the seductive abstractions
o the French Revolution. It should
also be about outcomes. A liberal has a
responsibility to ask what works, what is
ecient, and what produces results.
Unless a political credo improves society’s
fortunes, it deserves to be discarded.BAGEHOTIAN BANKING
Bagehot’s pragmatism—his focus on
what worked rather than what principle
dictated—underlies his most lasting
intellectual contributions. It runs
through Lombard Street, Bagehot’s Ãnan-
cial treatise, whose defense oÊ bailouts so
deeply oends Grant’s hard-money
standards. Grant scolds Bagehot for “his
embrace o the dubious notion, so
corrosive to Ãnancial prudence, that the
central bank has a special obligation to the
citizens who present themselves as
borrowers and lenders, investors and
speculators. No other class o person
enjoys access to the government’s money
machinery.” Grant also has a soft spot
for Bagehot’s contemporary antagonist,
the justly forgotten Thomson Hankey,
who worried about the moral hazard
created by central banks acting as lenders
oÊ last resort. “The most mischievous
doctrine ever broached,” Hankey called it.more defensible way, proving the vital
principle that there is more to wisdom
than principles.
Thus it was with the Victorian debate
over the franchise. The democratic
principle logically implied that everyone
should have the vote; Bagehot nonethe-
less feared that a universal franchise
would undermine democracy in practice.
He favored relaxing the requirement
that voters own property, but gradually.
It would be counterproductive to extend
rights to those who were not ready to
exercise them. In 1866, when Gladstone,
then the chancellor o the exchequer,
introduced a bill that would allow more
working-class men to vote, Bagehot
criticized the proposal as overreach.
The bill, he charged, would “enfranchise
a very large number o persons who will
consider their votes, and whose wives
will consider their votes, as so much
saleable property.” This was not a frivo-
lous concern. Grant recounts a hilarious
interlude in which Bagehot stood
unsuccessfully for Parliament. Despite
Bagehot’s express instructions that he
wanted a clean race, his election agents
bought votes on his behal and then
brazenly demanded repayment.
Herein lies an uncomfortable mes-
sage for today’s liberals. A policy can
be attractive in principle but mistaken
in practice. Consider the 2003 U.S.
invasion o Iraq: in principle, removing
a dictator and replacing him with a
democratic regime might have been a
good idea; in practice, it was not.
Following the same logic, i Bagehot were
alive today, he might favor immigration
restrictions in advanced democracies.
In principle, liberal immigration policies
enhance individual freedom and pro-
mote economic growth. In practice, too