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Policy Making for a Better World

COVID-19 has exposed defects in our current political–economic order: extreme wealth inequality, an ideology-driven government, a greedy corporate sector, a precarious labour force and a looming climate catastrophe.

This accessible book offers a unique blend of moral imagination and social–political analysis to overcome these defects. It focuses on two characteristics of contemporary societies – hegemony and complexity – that have inhibited our ability to imagine, and take seriously, better practices and institutions.

Considering housing, work, governance, finance, climate change and more, this book presents feasible and pragmatic solutions which are informed by a comprehensive vision of a flourishing, sustainable and richly democratic society.

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Occasionally, in the ongoing torrent of news and information that forms the background to our everyday lives, we are confronted with a story or image that, because it drives home the enormity of a particular situation, stops us in our tracks. The photo of 3-year-old Alan Kurdi, lying face down on the waterline of a Turkish beach, drowned on 2 September 2015, in an attempt to reach European shores, was such an image. It encapsulated the full horror of the Syrian refugee crisis that was unfolding in the Mediterranean. The image of that small lifeless body filled the viewer with emotions of pity and anger, a helpless feeling of being a bystander to a situation of vast moral complexity and unscrupulous political calculation.

Reading the first pages of Jessica Bruder’s Nomadland. Surviving America in the Twenty-First Century (2017) prompted a similar visceral reaction in one of us (HW). In a virtuoso act of reporting, Bruder introduces a cast of characters whose lives she describes in the book. A former San Francisco cab driver, 67, who labours 12 hours a day, in sub-zero temperatures, at the annual sugar beet harvest in Minnesota.

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The last 40 to 50 years have witnessed extraordinary economic growth and technological development. While in many countries, particularly, but not exclusively, in the developed world, large numbers of people have experienced unprecedented prosperity and security from an array of social risks, the way we have organised our society and economy has eaten away at the very foundations that made this growth possible. These foundations are environmental, social and moral. Thousands of books, blogs and op-eds have been written to diagnose the destructive processes that have resulted in environmental degradation, unprecedented inequalities in wealth and income, the hollowing out of labour contracts and worker representation and the associated decline in wages, social misery for millions through unnecessarily tight fiscal policies, structural racism and sexism, and the erosion of democracy in many countries. It should not have taken COVID-19 for us to realise that things have to change, and that the way we organise our economy is killing people and the planet.

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In this and the six following chapters we will present what we believe are the elements that are required for a better world for humans and for the planet. None of these solutions are new: each one of them has been proposed and tried out in one form or another before. But rarely have they been presented in connection with each other. For example, while politicians on the Left have long argued for an improvement of public infrastructure, they are more reluctant to present concrete ideas to tackle the dysfunctional global financial order. But the latter is a condition of possibility for the former. In the preceding chapter we argued that, next to hegemony, another reason that it is so difficult to get a grip on the pandemic and its fallout is its complexity – not in the trivial, but in the non-linear dynamics sense of the word. Complexity means that everything hangs together in a constantly evolving way. The development of complex systems is unpredictable not because people are too ignorant, unintelligent, or have too little evidence; it is unpredictable because the interaction of the elements in complex systems creates new, unforeseen outcomes. Complexity concerns policy because almost all spaces where humans and other living beings live and act maintain dynamic connections with other spaces. So far, however, policy tends to approach the problems within its purview in a reductionist manner.

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In Chapter 3 we outlined the importance of a comprehensive, well-funded public infrastructure that includes essential public services. We believe that housing is, if not the most important item on this list, the foundation for almost everything else.

In an exhibition about poverty in the 19th and early 20th century in the Wien Museum in Vienna (Schwartz et al, 2007), we saw old black and white movie reels about working class housing in the United Kingdom just after the First World War. Whole families in one grimy unheated room, one toilet and water outlet for dozens of families in the courtyard, and heart-breaking stories of eviction. The situation was similar or worse in Vienna at the time, as we will see below. During the First World War, the Emperor had to intervene when his soldiers defected en masse on discovering that their families were evicted from their homes back in Vienna. (He introduced the tenant protection legislation that is still in effect today.) The documentary also contained interviews with people who had moved to newly built public housing with running water, an inhouse toilet, and two rooms and a kitchen. To witness, across the chasm of history, the gratification of these families with their new living quarters was a moving experience. It was clear from their stories that the improved quality of their new dwelling somehow enhanced their dignity. For the first time in their life, they said, they had a secure and stable home.

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In his book Buying Time, his astute analysis of the course of post-Second World War capitalism, the German political economist Wolfgang Streeck argues that at the end of the 1960s, business began to withdraw from the postwar social pact (Streeck, 2017) – the particular settlement between capital, labour and the state that had ushered in the welfare state and the trentes glorieuses, three decades of social stability and affluence for the many. We will tell this story more fully in the next chapter on good government. Streeck describes how the dissolution of the postwar settlement had enormous consequences for almost every aspect of the organisation of state, society and economy. One of its most prominent victims was the gradual destruction of the fair labour contract.

Over the last 50 years the share of the national income pie that went to labour has steadily decreased, while that of capital has increased. According to OECD figures, between 1975 and 2013 the share of labour in the national income declined from more than 65 per cent to 56 per cent (ILO and OECD, 2015). This simple figure masks massive, wrenching changes in the lives of workers. First, wages have stagnated.

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Today, we as citizens of the advanced economies of the West inhabit a curious paradox. It is so familiar to us that we rarely give it a second thought. When we talk about our government, we usually do that in critical terms pointing out its failures and how politicians and bureaucrats cannot be trusted and make our lives difficult. At the same time, we enjoy the many services that the government provides, such as well-maintained roads, health care and education for all, income support for those who are less fortunate, legal protection against discrimination, and so on. On the one hand we are exposed to a steady stream of disparaging statements by economists, pundits and even elected officials about the intrinsic inefficiency of the state, its encroachment upon personal liberty and its constraining of the entrepreneurial spirit. In the United States any form of government intervention other than defence or policing is dismissed as ‘socialism’, often preceded by the adjective ‘European style’. It is little wonder, then, that in survey after survey the public displays little affection for the officials and institutions of the state. This observation is borne out by reams of research in political science that demonstrates the public’s profound distrust of politics and the institutions of government (Pew Research Center, 2019; see also EC, 2020).

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On 3 October 2007, writes the British journalist James Meek, the 500 workers at the Cadbury chocolate factory in the town of Keynsham were told that their jobs would be moved to Poland. ‘Highly paid, permanent, solidly pensioned jobs’, he adds. It does not surprise the reader that the move was exclusively motivated by the circumstance that ‘their Polish replacements could do the same job for less than one fifth of the money’, and not because Cadbury’s products were not selling, or because the factory was unprofitable (Meek, 2017). On the day of the announcement the managers locked the workers out and posted security guards at the factory gate. They feared a violent reaction. But the workers, many of whom had worked at the company for decades, ruefully remarked that management had misjudged the mood in the community and that the residents would have done anything to keep the factory in Keynsham.

Meek’s article about the move of the Cadbury factory to the Polish region of Skarbimierz encapsulates everything that is problematic about the corporate sector today. He describes in detail how the history of the company was joined up with the culture and history of the town. Generations of Keynsham residents had been employed by the company. The town’s economic destiny, its collective pride and its residents’ identity were tied up with the Cadbury plant.

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As the saying goes: money makes the world go round. In the age of global finance, this truism has a literal ring to it. Societies need capital to finance production. Companies that want to invest in productive activities require money, either by issuing bonds or shares or by taking up bank credit which they pay back at a later date from the return on the investment. Individuals need money to buy essentials or obtain credit to purchase big ticket items such as a house or a car. States provide or underwrite important investments with payoffs that are too uncertain, too big or too far into the future to be attractive to private investors. In general, the development of finance is associated with higher levels of income in the population (Kay, 2015, 3). In addition, lenders need to be protected against the risk of insolvent or fraudulent borrowers. That is why we have banks and some form of state-guaranteed protection of bank deposits. In principle, if not in practice, money is a public good.

However, that is not how banks see it. The financial sector has grown into a global Moloch that, although facilitated by the state at every step, largely operates outside effective democratic or regulatory control. In fact, the banking sector has split off a whole sector, shadow banks, specifically designed to work outside regulatory oversight. The finance sector is an opaque complex of law, customs, policies, trades in IOUs, formal and informal agreements, and personal networks, that is only intelligible to insiders.

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‘This is Europe’s man on the moon moment’, said EU Commission President Ursula von der Leyen when she announced the European Green Deal in December 2019, just before the COVID-19 crisis hit Europe. Models on economic growth based on fossil fuels are ‘out of date and out of touch with our planet’, the Commission President said. It was time to develop a new regenerative growth strategy that ‘gives more back than it takes away’ (Hutchinson, 2019).

The ‘man on the moon moment’ metaphor is not without problems, for reasons that we will discuss below. But it is instructive in at least one big way: it conveys the sense that something that was deemed inconceivable – namely that a human being would walk on the moon – could be realised. That things that seem beyond human reach can be made possible with human ingenuity, persistence and a leap of faith. We believe that a sustainable society, despite the frequency with which ‘Green New Deal’ (GND), no growth and other concepts are being mentioned in public discourse, is something that is still not conceivable for many people. It is a dream far removed from what most people think is a realistic possibility. This is despite the fact that the elements and architecture of a sustainable society are well known. Ecological economists have laid out what a society and economy that operates within its ecological capacity would look like (Daly, 1997).

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