Society stabilizers

Both the Metropolitan Transportation Commission and the Association of Bay Area Governments are currently taking feedback on the Plan Bay Area proposal to reduce the speed limit to 55mph on Bay Area freeways. Dropping the maximum limit by 10 mph could reduce emissions 6% by 2035 — the equivalent of taking 300,000 cars off the road. Under state Senate Bill 375, passed in 2008, the Bay Area must reduce its greenhouse gases 7% by 2020 and 15% by 2035.

On the face of it this seems like a plausible idea, and for me it stimulates additional ideas for state policy makers. For example, most commuters want to travel faster than 55mph nearly as much as they want good air quality to enjoy. So the speed limit, rather than being fixed, could become actively conditional on real-time carbon emissions: the higher the emissions each hour on the freeway the lower the set speed limit becomes, and vice versa. This idea would create a sustainable equilibrium between polluters and environment, as well as potentially creating a further (collective) demand for the advancement of low-carbon technology.

For those of us passionate about not just a sustainable environment but also a stronger society, there is a fundamental idea worth looking further at here. It’s the idea of a positive equilibrium between society and the economy. Imagine for a second your annual energy costs divided equally over the 12 months of the year – in the winter months you’ll be using more energy than in the summer months but rather than your personal finances being exposed to the peaks and troughs of seasonal needs they are stable throughout the year because thanks to your fixed monthly payments smoothing out potential debit, as well as credit.

A strong society requires high levels of interaction and social bonds, yet we know that during times of economic growth the temptation for individuals to withdraw from social interaction and community collaboration peaks (“why share when I can buy my own”). Consequentially this weakens levels of community capital required for a strong society – decreasing social bonds and relationship building. Ironically though, in the economic good times people cope by compensating for the trough in social bonds through evermore individual consumption fueled by increased debt. Society then has a false sense of security that both economic and community well-being are both peaking. They are not: individual economic prosperity is simply displacing community collaboration.

So, the catastrophic impacts of reduced community capital in society are most acutely felt  during times of economic downtown. Individuals suffering economic hardship look to society (their communities, their networks, their relationships) for mutual support yet, as demonstrated by the sub-prime housing crash, many of those societal bonds and ties had been dramatically weakened if not smashed during the good times. Many families were left with far fewer options of support within society than they should have had.

Now that California is slowly emerging from recession, and once again we look to the light at the end of the tunnel that is economic growth, perhaps policy makers might want to think more about how they can ensure social bonds in society are stabilised relative to economic growth (think back to the energy consumption peaks and troughs example above). A very tricky area, but the state has a legitimate active role here given what we know is an inherent market failure of the economy to price in long term future shocks to society.

A good first principle value for policy makers would be to identify that isolationism weakens society, while collaboration strengthens it. So in a growing economy, society would benefit from ‘stabilisers’ that reward community consumption over individual consumption. For example, two people in the same neighbourhood could buy the latest flatscreen television and premium cable channels with their increased disposable income. One person may simply want to enjoy it in isolation, which is their choice but does little to strengthen the neighbourhood bonds society needs. The other person once a week opens his TV room up for all the neighbours on his street to come and enjoy a movie together – everybody brings their own food and drink to share and over time the community relationships society needs blossoms.

Now, policy makers should be understanding firstly how they can enable all those people who do want to share with others (the most recent ideas suggested by the leading innovators in this field have involved new ‘platforms’ – think ebay –  which enable strangers to connect and collaborate). Secondly policy makers want to be thinking how to ‘price in’ the difference between those that actively participate for the good of society versus those that prefer to opt-out of community responsibilities (the most recent ideas again suggested by the leading innovators in this field have ranged from ‘community dividends’ – think tax rebates – through to ‘state award ceremonies’ – think medal of valor – and enhanced personal ‘reputation ratings’ – think ebay again)

The challenge to maintain strong social bonds, in spite of economic growth and increasing individual consumption of goods and services, is very hard and innovation like that described above is even harder (given current path dependencies) – there is a huge amount of learning to be done. The potential rewards though for both the state and society – in good and bad economic times – are huge, which is why such bold state innovation should be pursued with both courage and vigour.

A more strategic state

Yesterday in the UK saw the publication of an excellent report by a Westminster Parliamentary committee called the Public Administration Select Committee into the importance of ‘strategic thinking’ by those running the state. There is lots of good thinking in the report itself and its recommendations are well worth a read, especially the call for a ‘national strategy statement’ each year prior to the annual UK budget statement (forcing the UK Treasury to justify annual tax and spend policies based on the long term strategic interests of society, rather than the state treasury’s narrow interests)

Rather boldly though, given the committee chairman Bernard Jenkin MP is a member of the majority party in the ruling UK coalition government, the report stated that at present (and under prior administrations) “Government policies are not informed by a clear, coherent strategic approach, and that poor strategic thinking also undermines clarity of presentation to the public.” Coming from a British politician that is right in the strike zone for a Government.

The consequences of this lack of coherent strategic thinking, at the heart of the state, has had direct consequences for the shape and direction of UK society. A brilliant editorial in the UK wide newspaper, The Daily Telegraph, explained that the state has wasted a golden opportunity to undertake a fundamental review of what the state should and should not be doing, with the cost now being that what drives the policy is not a desire to rethink the role of the state from first principles, which is what it should be, but an ad-libbed attempt by the Government to salami-slice budgets in an attempt to live within its means”

How can we get the state to think more strategically about the society we all want? Well firstly we need to make sure key state actors want to think strategically! The most candid and insightful bit of oral evidence documented in the report came from a former senior civil servant who used to run an actual ‘strategy unit’ for a past British Prime Minister. According to Gill Rutter  “there is only any point in working in a strategy unit if there is demand for strategy …If they [politicians] felt it was necessary to have an underpinning clear narrative that they were judged by over the longer term, there might be more demand to think in that way in Government”

This is crucial. The state must have an “underpinning clear narrative” about where society is and where it is going otherwise it will never be able to help strengthen it. We know that without a state purpose, society is more likely to drift than strengthen. So, perhaps central governments such as the UK should actively consider breaking down the barriers to the development of a clear narrative and coherent strategy: what the Jenkin report called “departmental silos”

In Westminster the secretaries of state (i.e. home affairs, education, health) all sit in their own distinct organisations based along a busy street leading from the Houses of Parliament up to Trafalgar Square called Whitehall, yet rather than collaborating on a single narrative and common goals they and their many civil servants compete against each other to maximise their own agendas and spending resources. Well, there is a simple first step here to strengthen the coherence of the Westminster government: take all the secretaries of state out of their departments and put their desks all under one roof. Encourage them to work (and commission work from departments) together in the strategic interests of society, rather than in the narrow interests of their departments.

The great california exodus

This weekend the WSJ featured an interview with Joel Kotkin, a US demographer who has been studying demographic trends over the past 30 years. The article notes starkley that Californians are increasingly pursuing happiness elsewhere: “Nearly four million more people have left the Golden State in the last two decades than have come from other states. This is a sharp reversal from the 1980s, when 100,000 more Americans were settling in California each year than were leaving. According to Mr. Kotkin, most of those leaving are between the ages of 5 and 14 or 34 to 45. In other words, young families.”

This has big consequences for the sort of society California is to live in: an increasingly polarised one. “California is turning into a two-and-a-half-class society. On top are the “entrenched incumbents” who inherited their wealth or came to California early and made their money. Then there’s a shrunken middle class of public employees and, miles below, a permanent welfare class. As it stands today, about 40% of Californians don’t pay any income tax and a quarter are on Medicaid.”

What’s driving this? Well Kotkin seems to think it’s the responsibility of the state arguing that: “the state is run for the very rich, the very poor, and the public employees.” His solution to reversing the flight of the middle classes to such delightful areas as Salt Lake City and Texas? A drive against red-tape, lower taxation, and de-regulation of planning laws. Effectively a smaller pro-business state (regardless of the consequences to the Environment).

Regardless of whether you agree with Kotkin’s proscription for Golden State reform, he did make quite a profound point for those us who believe a government’s primary motive should be to strengthen our society. When commenting on the consequences of 40% of the state population paying no income tax Kotkin said: “What you’ve done by exempting people from paying taxes is that they feel no responsibility.” Is this true? It would be interesting to dig further into this: the correlation between payment of state taxes and responsibility to the society you live in. Is there evidence to suggest that the state strengthens society by ensuring everybody pays tax?

If the answer is yes, then it should have implications on the other side of the pond for the UK Coalition government. They are currently committed to lifting low paid workers out of the tax system altogether, but will this really strengthen the low paid’s stake in society? Equally some of the most disconnected people in the UK (the unemployed) are exempt from from their local taxes. Would the state paying extra benefits, but then reclaiming that extra through payment of taxes by the unemployed encourage greater individual engagement and responsibility in society (especially amongst long term unemployed young people)?