Going Local: Territory in Social Management
Menu
SHARE
Compartilhar no facebook
Compartilhar no twitter
Compartilhar no linkedin
Compartilhar no email

Going Local: Territory in Social Management

A look at the merits of decentralization vs centralized economic and governmental structures: Local participatory and decentralized management of public affairs is being rediscovered, as a basic anchor to ensure that the overall result is a sustainable and more balanced development. The greater part of the world population presently lives in cities, a proportion that reached 87% in Brazil.
Autor
Ladislau Dowbor
Tamanho
2 páginas
Originalmente publicado
Data
10 de outubro, 2021

We do not lack resources, we lack social and political organization. In the name of free markets, of some invisible hand and magic figures such as the supply and demand curves, the Kuznets graph, the “U” or the “W” descriptions of our economic ups and downs, we have transformed economics into some sacred cow we must not mess with. Instead of thoughtfully bending our necks over econometrics or commenting over “Bear” or “Bull” markets, according to the whims of big asset management corporations, we must bring economics back into a more modest role of a useful but complementary approach to social science. The economy must serve what we need in society, ensuring the well-being of the population, and not the other way around.

How do centralized politico economic structures impact our standards of living
How do centralized politico-economic structures impact our standards of living?

GDP growth is a technically flawed figure which leads us to reward any expansion of human activities, even if we are destroying natural resources, generating inequality and suffering, and creating an environmental disaster. GDP measures only the quantity of efforts, not the quality of outcomes. We should measure what it is we are producing, at what cost to ourselves and to the planet, and for whose benefit. We have a Boeing-sized vehicle with only a speed indicator, with no idea of where we are headed or even of how much fuel remains. An indicator which does not take into consideration the environmental and inequality issues is out of touch with reality.

But do have the necessary information? The 2030 Agenda, with its 17 development goals and 169 objectives, organizes our challenges and necessary measures. The UN added health and education indicators to the income figures; the Stiglitz report on national accounts (with Amartya Sen and Jean-Paul Fitoussi) showed all the fragility of how we measure economic results; the European Commission organized the “beyond GDP meetings”; Hazel Henderson and others published the Calvert-Henderson Quality of Life Report on the US; and Kate Raworth organized key measures of development in her Doughnut Economics set of indicators. We have the statistical tools to steer development in the path of sustainability and well-being, so that we know where we should be heading, and we know that we are in the wrong direction.

We possess all the necessary technological knowledge to reorient our development towards sustainable goals. The energy matrix, the transportation matrix, the sustainable agriculture initiatives, the preservation of bio-diversity and other key challenges are all within our technical reach. We are so proud of sending stuff to Mars, but are unable to promote the key transformations to reduce the destruction of nature and human suffering. Pre-historical patent, copyright and royalties are restraining access to key technologies and scientific knowledge. How can we still have 20-year patents on key pharmaceutical products, an eternity in modern technological times, creating rent-seeking monopolies? 90-year copyrights? This is techno-feudalism, as Marjorie Kelly and Ted Howard have described it. Accelerated technological change and stagnating institutional innovation create a dangerous mix.

And we do not lack financial resources. The prosperous welfare state economics of decades ago, and particularly the stunning technological revolution surging in so many areas, have brought us to a new border of material prosperity. If we divide the world GDP, 88 trillion dollars, by the population, 7.8 billion, we see that we produce almost 4 thousand dollars per month per four-member family. We have a rich society, but poor policies.

According to the Global Wealth Report 2021 by Crédit Suisse, a giant wealth-management institution, “total global wealth grew by 7.4% (in 2020) and wealth per adult rose by 6% to reach another record high of US$ 79,952. Aggregate global wealth rose by US$ 28.7 trillion to reach US$ 418.3 trillion at the end of the year.” This is wealth per adult, roughly US$ 80 thousand, or around 160 thousand dollars in a two-member adult family. We are not a poor world. Some 800 thousand reais as family wealth in Brazil would send us dreaming. But wealth is for the happy few. “Wealth differences between adults widened in 2020. The global number of millionaires expanded by 5.2 million to reach 56.1 million. As a result, an adult now needs more than USD 1 million to belong to the global top 1%…The ultra-high net worth (UHNW) group grew even faster, adding 24% more members, the highest rate of increase since 2003.” The pandemic has hit the economy, but not the billionaire extractive finance world.

The world is awash in well-organized information, powerful technology and impressive financial resources. We know what should be done, we have the technical and financial means, and we basically sit back and lament that the wrong things are happening. We are destroying the natural world essential to our survival, compromising the next generations, for the benefit of the very few. We are systemically dysfunctional, and a teenager has shown more good sense than so many mature politicians and corporate executives. If there is a common denominator among so many social scientists – and the pandemic only gave them the final push – it is that we need a new set of rules, a new economic culture, some kind of global green new deal. And the time window before we meet systemic disaster is getting very narrow.

The issue we want to raise here, is that we need to bring the overall economic decision process down to earth, nearer to where people live, so that politics, meaning the decisions concerning our common good, is brought to a level where it can make sense for the population. Basically, we have a global economy, but not a global government. An editorial in The Guardian sums it up: “Computers run investment portfolios offering cheap “exchange-traded funds” that automatically track indices of shares and bonds. This has been so successful that the big three – US firms BlackRock, Vanguard and State Street – now manage $19tn in assets, roughly a tenth of the world’s quoted securities…Markets are supposed to allocate capital efficiently. They plainly do not. Society is experiencing inequality and financial instability. Minsky contended that market behaviour had to be constrained to ensure the “economic underpinnings of democracy”. His advice seems truer today than ever.”

Three corporations manage 19 trillion in assets, almost the 21 trillion of US GDP. BlackRock alone manages 8.7 trillion dollars, five times the GDP of Brazil. UNCTAD World Investment Report gives us an idea of the proportions: “The investable assets of insurance companies reached $32.9 trillion in 2018, and those of banks reached $155 trillion in 2019.” Finance was once the financial tool of productive activities. Presently, productive activities serve financial interests. The tail is wagging the dog. Dividend extraction and debt service have changed the way social surplus is extracted, but the issue is that key economic activities are beyond state-level regulation.

The timid first steps to provide some kind of global tax payment by corporate giants, decided upon in the 2021 G20 meeting, are evidence of the fragility of national governments in the face of world-scale financial flows. The situation of indebted countries of the global south is particularly dramatic. Without financial sovereignty there is little political sovereignty, and little capacity for a government to channel its resources according to national needs. As Wolfgang Streeck has it, government presently has a far better survival chance being market friendly than people friendly. And markets are global. We have national governments and a global economy.

A similar maladjustment can be found between the national government institutions and the local decision-making process. In the case of Brazil, the 1988 Constitution delegated a great part of public policies to local governments (municipalities), such as education and health, but did not decentralize the corresponding resources. Simply stated, there is no way a country can work if the local management does not work. Brazil has 5,570 municipalities, and they have few resources to cope with their basic needs. Mayors are helpless, and seek friends in Brasilia. What can a minister in Brasilia know about the diversified local challenges? Presently mayors are subservient to top national politicians, and national politics is absorbed in local skirmishes. If we add the transnational interests that reduce the national governance capacity, the overall result is that neither central government nor local governments are able to set up a working decision-making process.

Local participatory and decentralized management of public affairs is being rediscovered, as a basic anchor to ensure that the overall result is a sustainable and more balanced development. The greater part of the world population presently lives in cities, a proportion that reached 87% in Brazil. Governing cities is different from governing a dispersed rural population, and generates proximity economies. As so many studies, such as Schumacher’s classic Small is Beautiful or Robert Putnam’s Making Democracy Work, have shown, the potential of improving public management when the government and the money are nearer to the stakeholders represents a huge underused potential to improve governance.

An important argument supporting this trend is the fact that social policies are becoming increasingly important in the composition of economic activity. In the US, for example, industrial activities employ less than 10% of the working-force, while health services alone represent 20% of GDP. With knowledge becoming the main production factor in modern economies, the wide range of activities linked to education have also expanded. While tennis shoes can be imported from Asia, social policies are deeply community rooted, and locally managed. Organizing local sustainable development, creating local quality of life, investing in local jobs through initiatives such as the green belt around the cities, or even urban agriculture – an impressive number of our challenges can be better faced at the local level, by people who know their priorities because they face them every day.

I have heard arguments in Brasilia that decentralization would make corruption easier because local governments have less technical expertise. The argument is ironic, considering what happens in Brasilia, but the fact is that money nearer to the people is easier to control, and it is easier for communities to organize around key issues. And presently, with the connectivity the internet permits, inter-city cooperation, particularly for small municipalities, is generating economies through joint use of technical capacity and collaborative consortia in different sectors. Partnerships with regional universities and research centers are also creating a new management culture. The fact is that connectivity and the horizontal network management it permits are opening new opportunities.

Whatever the institutional and territorial arrangements adopted, the main issue is that nowadays decisions are being taken too far from the stakeholders, generating an overall erosion of responsibility, and creating a wide-spread feeling of being indignant but helpless. When so many people are aware of the necessity of change, and so little happens, it is a question of systemic management failure. We have all the knowledge, technlogy, financial resources, but we are stubbornly speeding towards a wall, whether this be in environmental, social, political or economic terms. The things we must change are all in the books, including the ESG proclamations by the corporate world, but very little is happening. We do need a new Bretton Woods.

Uma resposta

Deixe uma resposta

O seu endereço de e-mail não será publicado. Campos obrigatórios são marcados com *

Veja Também

Receba recomendações de leitura no seu email.
Nós não compartilhamos o seu email com ninguém. Você receberá em média um email por mês.
Artigos
Ladislau Dowbor
– 9 de março, 2022
– 4p.
How long will we economists, engineers, lawyers, architects, administrators and so many other professionals go along with the use of our technical expertise for stupid, if lucrative, aims? There is no necessary contradiction between a reasonable salary and a peaceful conscience. The system is rigged.
Artigos
Ladislau Dowbor
– 9 de abril, 2022
– 4p.
A vicious circle generating social polarization, violence and more corporate-dominated politics: the inequality issue goes much beyond poverty and lack of access to basic goods and services. It is also about the feeling of inequality, the humiliation and frustration of being left out of the main trend, of being deprived of opportunities.
Assine a newsletter e faça parte da nossa comunidade.
Nós não compartilhamos o seu email com ninguém. Você receberá em média um email por mês.