Friday, November 28, 2014

To the Victors Go the Foils

NEW YORK – A surprising number of elections and political transitions is scheduled to occur over the coming months. An incomplete list includes Russia, China, France, the United States, Egypt, Mexico, and South Korea.

At first glance, these countries have little in common. Some are well-established democracies; some are authoritarian systems; and others are somewhere in between. Yet, for all of their differences, these governments – and the individuals who will lead them – face many of the same challenges. Three stand out.

The first is that no country is entirely its own master. In today’s world, no country enjoys total autonomy or independence. To one degree or another, all depend on access to foreign markets to sell their manufactured goods, agricultural products, resources, or services – or to supply them. None can eliminate economic competition with others over access to third-country markets. Many countries require capital inflows to finance investment or official debt. Global supply and demand largely set oil and gas prices. Economic interdependence and the vulnerability associated with it is an inescapable fact of contemporary life.

But economic dependence on others is not the only international reality with which governments must contend. It is equally difficult – if not impossible – for countries to isolate themselves from terrorism, weapons, pandemic disease, or climate change.

After all, borders are not impermeable. On the contrary, globalization – the immense flow across borders of people, ideas, greenhouse gases, goods, services, currencies, commodities, television and radio signals, drugs, weapons, emails, viruses (computer and biological), and a good deal else – is a defining reality of our time. Few of the challenges that it raises can be met unilaterally; more often than not, cooperation, compromise, and a degree of multilateralism are essential.

A second universal challenge is technology. George Orwell’s vision of 1984 could hardly have been more wrong, because the hallmark of modern technology is not Big Brother, but decentralization. More computing power can now be held on a desktop or in a person’s hand than could be gathered in a room only a generation ago. 

As a result, people everywhere now have more access to more sources of information than ever before. making it increasingly difficult for governments to control, much less monopolize, the flow of knowledge. Citizens also have a growing ability through mobile phones and social networking to communicate directly and discreetly with one another. 

One consequence of this trend is that authoritarian governments can no longer wield control over their citizens as easily as they once did. Technology is, no doubt, one explanation for the uprisings that we are seeing in much of the Arab world. But modern technology also has implications for well-established democracies. It is far more difficult to generate social consensus and to govern in a world in which citizens can choose what they read, watch, and listen to, and with whom they talk.

A third widespread challenge that awaits emerging leaders is the inescapable reality that citizens’ demands increasingly overwhelm the capacity to satisfy them. This was always true in the so-called developing (and often relatively poor) world. But now it is also the case in the relatively well-off mature democracies, as well as among those countries that have been growing fastest.

Economic growth is slower in many cases than the historic norm. This is readily apparent for much of Europe, Japan, and the US. But growth is also slowing in China and India, which together account for more than one-third of the world’s population. Unemployment rates are high, especially in the US and Western Europe, and especially among the young and those nearing the end of their careers (but who are still expected to live for decades). More worrying still, much of this will translate into long-term unemployment.

The net result of these economic and demographic shifts is that a growing share of national income is now being directed to provide health, pensions, and other forms of basic support, while a declining percentage of citizens in nearly every society is now working to support a growing number of fellow citizens. This rising dependency ratio is made worse by widening economic inequality; as more wealth is concentrated in fewer hands, the promise of ever-improving standards of living for most people may not be fulfilled.

Together, these three trends – a loss of economic and physical autonomy, the diffusion of information technology, and slower growth against a backdrop of larger and older populations – will create enormous political challenges in virtually every country. Demands are mounting at the same time as the ability of governments to satisfy them is diminishing. The leaders who will take power after this year’s transitions will confront this fundamental reality.

Leaders will also have to confront the byproducts of increased nationalism, populism, and, in some cases, extremism. Hostility to immigration and economic protectionism, already visible, can be projected to increase.

These developments within countries will make more difficult the challenge of generating global consensus on how to meet threats beyond borders: as governing successfully at home becomes more difficult, so will governing abroad. For citizens and leaders alike, tough times lie ahead.

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    1. CommentedKir Komrik

      Thank you for the useful article,

      I'd like to nominate two other nations of great interest in terms of inchoate change:

      1. Cuba
      2. Venezuela

      Of course, these are wildcards with less certainty about which way they will go, and that is what makes them particularly interesting. It looks like there is a non-negligible possibility that they might even go in a truly novel direction, which would be refreshing since, imo, no political and economic system we've seen so far is going to serve us sufficiently for the future we have coming to us.

      - kk

    2. CommentedFriedrich Böllhoff

      I think leaders in the mature democracies make a mistake by not openly addressing the problem “that the citizens' demands increasingly overwhelm the capacity to satisfy them”. By trying to maintain the impression that there will not be severe problems with the welfare state within the next one or two decades they undermine the citizens' trust in their leadership and maybe also their governing system.

      I'm convinced that many more citizens see the problems than their leaders believe.

    3. CommentedMatthew Roman

      George Orwell was wrong? Major cities are blanketed with security cameras, and there are cameras to catch and fine you should you speed or run a red light. Police cars are outfitted with license plate readers supplying databases with the locations of our cars, day and night, in real time. Our cellphones can be used to track our whereabouts, whether or not we are using them. Our online communications are stored, sold, and used to track our preferences, and to sell us goods and services. If we are arrested for any crime, not convicted, mind you, just arrested, we must submit a DNA sample into a national database so that law enforcement can easily access our DNA signature, without a warrant, in the investigation of crime.

      Orwell may not have got all the details precisely right, he may not have envisioned how people today, with their usage of cellphones and Facebook and Google, would actually seem to relish their lack of privacy, but he sure wasn't wrong. Big Brother is here, and he has only just begun.

    4. Commentedjohn werneken

      It would seem that the solution and likely future are the same: less reliance on government and more private action and diversity between expectations and realities, like these things or not.

    5. CommentedPaul A. Myers

      Two generations ago governments in advanced countries made large on-going investments in physical infrastructure and social investments in education. These two investment flows created opportunities to put young people to work at highly productive tasks that resulted in rising national incomes. Private investment almost always stands on the broad shoulders of public investment. Build a highway and a harbor and private money will build a plant.

      Today, governments in the advanced countries have radically downsized their investment functions while flowing huge amounts into public consumption and retirement benefits for individuals who no longer make an incremental contribution to either productivity or output.

      Public employee unions, in particular, have made the public sector wooden, unresponsive and quite expensive. Public productivity must walk hand-in-hand with private sector productivity.

      So, when people ask where is the growth, my answer is where is the equity to drive the growth-giving investment? Endless central bank monetary creation will not get an economy from here to a prosperous future. At some point people have to put their shoulders to the tasks.

    6. CommentedZsolt Hermann

      It is a very good overview article touching on all the challenges, traps and deadlocks we are globally facing today.
      In truth humanity is facing a historical challenge since we never had such a convergence of different factors forcing us to make fundamental changes in our lives.
      So far our evolution has been quantitative, we always wanted more, bigger, better, faster.
      Our whole socio-economic model with its constant growth, expansive structure is a good reflexion of this attitude.
      But today this quantitative evolution has stopped, and we are regressing instead of progressing, since with our global, interconnected world, with the finite natural resources, growing social inequalities, reached a tipping point and now our system started self destructing.
      We have only one solution, to transform ourselves from quantitative evolution to qualitative one, instead of simply instinctively satisfying our basic desire for more pleasures, profit, fulfillment for ourselves regardless of the consequences, like children in a toyshop, we have to realize what our new, 21st century global and integral conditions mean, what it means to be totally dependent on everybody else even for our basic necessities, we have to understand the basic, natural laws governing living, natural systems apart from human societies, and then start applying all that knowledge on ourselves.
      Paradoxically in this new system prosperity, health, sustainable future means that instead of myself, first of all I have to consider the integrity and optimal function of the system.
      We are a species facing an evolutionary challenge. Can we adapt to the new conditions we find ourselves in, can we rise above our inherent selfish nature to create a mutually responsible, cooperating global society?
      The answer goes way beyond the forthcoming elections.

        CommentedShan Jun Chang

        I concur with Friedrich; the demands we are making on our governments are becoming increasingly irrational. "We want public sector jobs" "We want to pay less tax". " We want better public services, we want subsidised education, healthcare etc." We can't possibly expect the government to do all these things; there are trade-offs involved. Well actually, the government may be able to in the short-run, but that necessitates borrowing and accumulating public debt, and this is what they are incentivized to do, precisely because they want to win the next election. When this becomes unsustainable, the response is always protest and indignation. I think that's a bit self-righteous, because to put it into perspective, sustained economic growth and peace are, judging from history, the exception rather than norm, so there is already plenty to be grateful for.