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21 March 2013

The burning need for better supra-national governance

International organisations have a bad reputation these days. The United Nations is widely seen as ineffective. There’s a retreat towards “localism”: within Britain, the EU is unpopular; within Scotland, Britain is unpopular. And any talk of “giving up sovereignty” is deeply unpopular.

However, lack of effective international organisations and supra-national governance is arguably the root cause of many of the biggest crises facing humanity in the early 21st century.

That was the thesis which Ian Golding, Oxford University Professor of Globalisation and Development, very ably shared yesterday evening in the Hong Kong Theatre in the London School of Economics. He was quietly spoken, but his points hit home strongly. I was persuaded.

DividedNationsThe lecture was entitled Divided Nations: Why global governance is failing and what we can do about it. It coincided with the launch of a book with the same name. For more details of the book, see this blogpost on the website of the Oxford Martin School, where Ian Golding holds the role of Director.

It’s my perception that many technology enthusiasts, futurists, and singularitarians have a blind spot when it comes to the topic of the dysfunction of current international organisations. They tend to assume that technological improvements will automatically resolve the crises and risks facing society. Governments and regulators should ideally leave things well alone – so the plea goes.

My own view is that smarter coordination and regulation is definitely needed – even though it will be hard to set that up. Professor Goldin’s lecture amply reinforced that view.

On the train home from the lecture, I downloaded the book onto my Kindle. I recommend anyone who is serious about the future of humanity to read it. Drawing upon the assembled insights and wisdom of the remarkable set of scholars at the Oxford Martin School, in addition to his own extensive experience in the international scene, Professor Goldin has crystallised state-of-the-art knowledge regarding the pressing urgency, and options, for better supra-national governance.

In the remainder of this blogpost, I share some of the state-of-consciousness notes that I typed while listening to the lecture. Hopefully this will give a flavour of the hugely important topics covered. I apologise in advance for any errors introduced in transcription. Please see the book itself for an authoritative voice. See also the live tweet stream for the meeting, with the hash-tag #LSEGoldin.

What keeps Oxford Martin scholars awake at night

The fear that no one is listening. The international governance system is in total gridlock. There are failures on several levels:

  • Failure of governments to lift themselves to a higher level, instead of being pre-occupied by local, parochial interests
  • Failure of electorates to demand more from their governments
  • Failure of governments for not giving clearer direction to the international institutions.

Progress with international connectivity

80 countries became democratic in the 1990s. Only one country in the world today remains disconnected – North Korea.

Over the last few decades, the total global population has increased, but the numbers in absolute poverty have decreased. This has never happened before in history.

So there are many good aspects to the increase in the economy and inter-connectivity.

However, economists failed to think sufficiently far ahead.

What economists should have thought about: the global commons

What was rational for the individuals and for national governments was not rational for the whole world.

Similar problems exist in several other fields: antibiotic resistance, global warming, the markets. He’ll get to these shortly.

The tragedy of the commons is that, when everyone does what is rational for them, everyone nevertheless ends up suffering. The common resource is not managed.

The pursuit of profits is a good thing – it has worked much better than central planning. But the result is irrationality in aggregate.

The market alone cannot provide a response to resource allocation. Individual governments cannot provide a solution either. A globally coordinated approach is needed.

Example of several countries drawing water from the Aral Sea – which is now arid.

That’s what happens when nations do the right thing for themselves.

The special case of Finance

Finance is by far the most sophisticated of the resource management systems:

  • The best graduates go into the treasury, the federal reserve, etc
  • They are best endowed – the elite organisation
  • These people know each other – they play golf together.

If even the financial bodies can’t understand their own system, this has black implications for other systems.

The growth of the financial markets had two underbellies:

  1. Growing inequality
  2. Growing potential for systemic risk

The growing inequality has actually led to lobbying that exaggerates inequality even more.

The result was a “Race to the bottom”, with governments being persuaded to get out of the regulation of things that actually did need to be regulated.

Speaking after the crisis, Hank Paulson, US Treasury Secretary and former CEO of Goldman Sachs, in effect said “we just did not understand what was happening” – even with all the high-calibre people and advice available to him. That’s a shocking indictment.

The need for regulation

Globalisation requires regulation, not just at the individual national level, but at an international level.

Global organisations are weaker now than in the 1990s.

Nations are becoming more parochial – the examples of UK (thinking of leaving EU) and Scotland (thinking of leaving UK) are mirrored elsewhere too.

Yes, integration brings issues that are hard to control, but the response to withdraw from integration is terribly misguided.

We cannot put back the walls. Trying to withdraw into local politics is dreadfully misguided.

Five examples

His book has five examples as illustrations of his general theme (and that’s without talking in this book about poverty, or nuclear threats):

  1. Finance
  2. Pandemics
  3. Migration
  4. Climate change
  5. Cyber-security

Many of these problems arise from the success of globalisation – the extraordinary rise in incomes worldwide in the last 25 years.

Pandemics require supra-national attention, because of increased connectivity:

  • The rapid spread of swine flu was correlated tightly with aircraft travel.
  • It will just take 2 days for a new infectious disease to travel all the way round the world.

The idea that you can isolate yourself from the world is a myth. There’s little point having a quarantine regime in place in Oxford if a disease is allowed to flourish in London. The same applies between countries, too.

Technology developments exacerbate the problem. DNA analysis is a good thing, but the capacity to synthesise diseases has terrible consequences:

  • There’s a growing power for even a very small number of individuals to cause global chaos, e.g. via pathogens
  • Think of something like Waco Texas – people who are fanatical Armageddonists – but with greater technical skills.

Cyber-security issues arise from the incredible growth in network connectivity. Jonathan Zittrain talks about “The end of the Internet”:

  • The Internet is not governed by governments
  • Problems to prosecute people, even when we know who they are and where they are (but in a different jurisdiction)
  • Individuals and small groups could destabilise whole Internet.

Migration is another “orphan issue”. No international organisation has the authority to deal with it:

  • Control over immigration is, in effect, an anarchic, bullying system
  • We have very bad data on migration (even in the UK).

The existing global institutions

The global institutions that we have were a response to post-WW2 threats.

For a while, these institutions did well. The World Bank = Bank for reconstruction. It did lead a lot of reconstruction.

But over time, we became complacent. The institutions became out-dated and lost their vitality.

The recent financial crisis shows that the tables have been turned round: incredible scene of EU taking its begging bowl to China.

The tragedy is that the lessons well-known inside the existing institutions have not been learned. There are lessons about the required sequencing of reforms, etc. But with the loss of vitality of these institutions, the knowledge is being lost.

The EU has very little bandwidth for managing global affairs. Same as US. Same as Japan. They’re all preoccupied by local issues.

The influence of the old G7 is in decline. The new powers are not yet ready to take over the responsibility: China, Russia, India, Indonesia, Brazil, South Africa…

  • The new powers don’t actually want this responsibility(different reasons for different countries)
  • China, the most important of the new powers, has other priorities – managing their own poverty issues at home.

The result is that no radical reform happens, of the international institutions:

  • No organisations are killed off
  • No new ones created
  • No new operating principles are agreed.

Therefore the institutions remain ineffective. Look at the lack of meaningful progress towards solving the problems of climate change.

He has been on two Bretton Woods reform commissions, along with “lots of wonderfully smart, well-meaning people”. Four prime ministers were involved, including Gordon Brown. Kofi Annan received the report with good intentions. But no actual reform of UN took place. Governments actually want these institutions to remain weak. They don’t want to give up their power.

It’s similar to the way that the UK is unwilling to give up power to Brussels.

Sleep-walking

The financial crisis shows what happens when global systems aren’t managed:

  • Downwards spiral
  • Very hard to pull it out afterwards.

We are sleep-walking into global crises. The financial crisis is just a foretaste of what is to come. However, this need not be the case.

A positive note

He’ll finish the lecture by trying to be cheerful.

Action on global issues requires collective action by both citizens and leaders who are not afraid to relinquish power.

The good news:

  • Citizens are more connected than ever before
  • Ideologies that have divided people in the past are reducing in power
  • We can take advantage of the amplification of damage to reputation that can happen on the Internet
  • People can be rapidly mobilised to overturn bad legislation.

Encouraging example of SOPA debate in US about aspects of control of the Internet:

  • 80 million people went online to show their views, in just two days
  • Senate changed their intent within six hours.

Some good examples where international coordination works

  • International plane travel coordination (air traffic control) is example that works very well – it’s a robust system
  • Another good example: the international postal system.

What distinguishes the successes from the failures:

  • In the Air Traffic Control case, no one has a different interest
  • But in other cases, there are lots of vested interest – neutering the effectiveness of e.g. the international response to the Syrian crisis
  • Another troubling failure example is what happened in Iraq – it was a travesty of what the international system wanted and needed.

Government leaders are afraid that electorate aren’t ready to take a truly international perspective. To be internationalist in political circles is increasingly unfashionable. So we need to change public opinion first.

Like-minded citizens need to cooperate, building a growing circle of legitimacy. Don’t wait for the global system to play catch-up.

In the meantime, true political leaders should find some incremental steps, and should avoid excuse of global inaction.

Sadly, political leaders are often tied up addressing short-term crises, but these short-term crises are due to no-one satisfactorily addressing the longer-term issues. With inaction on the international issues, the short-term crises will actually get worse.

Avoiding the perfect storm

The scenario we face for the next 15-20 years is “perfect storm with no captain”.

He calls for a “Manhattan project” for supra-national governance. His book is a contribution to initiating such a project.

He supports the subsidiarity principle: decisions should be taken at the most local level possible. Due to hyper-globalisation, there are fewer and fewer things that it makes sense to control at the national level.

Loss of national sovereignty is inevitable. We can have better sovereignty at the global level – and we can influence how that works.

The calibre of leaders

Example of leader who consistently took a global perspective: Nelson Mandela. “Unfortunately we don’t have many Mandelas around.”

Do leaders owe their power bases with electorates because they are parochial? The prevailing wisdom is that national leaders have to shy away from taking a global perspective. But the electorate actually have more wisdom. They know the financial crisis wasn’t just due to bankers in Canary Wharf having overly large bonuses. They know the problems are globally systemic in nature, and need global approaches to fix them.

ian goldin

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4 Comments »

  1. Excellent post. I agree with these issues, but I think the underlying problem is that in most countries the incentives of politicians are not aligned at all with the long-term interest of the country. (Worst of all places in the US: http://www.nakedcapitalism.com/2012/05/its-not-about-reelection-bill-clintons-80-million-payday.html)

    One place where it works fairly well is Switzerland. I think that’s due to direct democracy, the debt brake and a kind of constant coalition government. But I doubt that model has much potential on a global scale…

    Comment by Brian — 21 March 2013 @ 2:43 pm

  2. An Oxford Professor of Globalisation and Development at the London School of Economics is almost certainly going to have an ideological predisposition towards this sort of thing and to have an audience that thinks in terms of its own implicit right to act as or advise as Platonic Guardians for an ignorant populace – all, of course, at the financial expense of that same populace. This is the type of failed technocratic thinking that the Italians rightly rejected at their recent General Election and which the Cypriots have just challenged.

    The analysis begs so many questions that one does not know where to start but let us just stick to the practicality of the intellectuals’ dream of world governance which, certainly since the fantasies of HG Wells, have tended to hide a certain brutalism about method (when the population is obdurate towards the ‘wisdom’ of the secular priests) and a contempt for the fact that, given particular resource constraints and determination to defend (quite rightly) their own autonomy and self determination as persons, nevertheless most people most of the time conduct themselves appropriately to their circumstances.

    The world does seem to be defined by two types of theoretician – those concerned with imposing order on the world for the sake of tranquillity and those concerned with personal autonomy and self-creation. With economic development, a certain ‘modus vivendi’ between these types – analogous to those who believe in God and gods and those who look on puzzled at the irrationalities of their fellows – emerges but it is always based on negotiation and struggle so that neither side imposes itself on the other.

    The mentality of the ordering intellectual in this context is deeply dangerous in this context for two reasons – the first is the rather obvious one that people are ‘not like that’ (simple units of ‘humanity’ with easy definitions of good and bad behaviour) and they will revolt, with some justification, at any form of power that is too distant from them or too regulatory or, if they do not, they have become cowed and less than human; the second is the simple matter of complexity – human society is more complex even than ‘nature’ and intellectual intervention usually results in Aral Seas of oppression, economic sclerosis and failure.

    Brian points up a truth. Swizerland works well though not ‘perfectly’. I would quite like the model for Southern Britain. But it works well because it is fairly cohesive organically through its history, quite small, unattached to a bigger organisation like the EU, resists international regulation and is very prosperous. Remove those pre-conditions and the French, German and Italian cantons would probably be at each others’ Alpine throats like their mountain equivalents in the Balkans – and dear old Paddy Ashdown and the EU have not really solved the problems there despite their ‘LSE liberalism’.

    Self determination of individuals and communities is more advanced than threat-obsessed imperial regulation. Even the Chinese understand this as they now look at democratic forms to use with prosperity. Instead of dabbling in politics, engineers and technologists should be concerned with empowerment through prosperity and politicians with creating better firebreaks against disorder emerging through markets, including migration and disease. Self-appointed priests from the academy and public intellectuals are dangerous, partly because they actually believe in what they claim as both possible and desirable.

    Comment by Tim Pendry — 22 March 2013 @ 9:37 am

    • Hi Tim,

      I didn’t see the distinction as between “wise Platonic guardians” vs. “ignorant populace”.

      Instead, the distinction was between “taking a parochial (local) view” vs. “finding ways to coordinate activities”.

      Our response to fast-transmitted viral outbreaks, whether it’s a new form of Spanish flu (as in 1918), or a malfunction in Internet connectivity, or financial contagion, necessarily needs some coordination between different actors worldwide, or it will fail.

      The reason the SARS outbreak claimed so many lives, worldwide, was that the mainland Chinese authorities tried to suppress news of it for too long, preventing a proper (timely) reaction.

      I like your suggestion of “creating better firebreaks against disorder emerging through markets, including migration and disease”, but I believe these firebreaks need coordination.

      Coordination of air traffic control systems around the world shows that this kind of coordination is possible, without us losing our existential human nature.

      The speaker was very much in favour of having decisions taken locally (below the level of the state, whenever possible). But some of these decisions need coordination at a higher level. And that’s what’s not happening at the moment.

      Comment by David Wood — 22 March 2013 @ 9:57 am

  3. I do agree that co-ordination is necessary but it is only half the game – we probably do not disagree on the matter of international co-ordination on existential threat but the game is given away by the reference (inter alia) to the need to ‘respond’ to the Syrian Crisis, a crisis constructed by the aggressive mismanagement of regional politics by the very minds who purport to understand the need for global governance. Categories are getting thoroughly confused by liberal internationalists like Golding and in a very dangerous and disturbing way.

    The other half of the game is to ensure precisely the sort of firebreaks within the system that the proponents of globalisation and ‘development’ have been working so hard to eliminate. It is not just about subsidiarity but about effective and educated representative democracy based on personal responsibility which is precisely what has been degraded by globalising liberal elites.

    Co-ordination and ‘firebreaks’ should work together on the principle of subsidiarity much as Profesor Golding suggests but the question remains ‘quis custodes custodiet’ in such a system where the technocratic element are simply not competent to deal with the complexity of the total system without turning our core values upside down to solve problems of their own making.

    The Cyprus case is a good example. Cyprus was a fundamentally mismanaged small economy that was permitted to enter into a technocratic total system without being reformed in advance. When a crisis hit, the necessary solution (and there is no other available) is one that is imposed from above on a local population so that they are left with nothing but rage and resentment and a fundamental and dangerous principle is established across a much larger area – that authority can ‘filch’ individual savings without due process in order to solve a technical problem arising from the very system protecting itself

    This is sinister bottom over elbow stuff. A total system accumulates power, discovers that there is a problem and then uses its accumulated power to impose a technocratic resolution as the lesser evil that, in this case, thieves private property which is no longer individual but disposable to the common good as defined not by the commonality in counsel but by ‘experts’. It is arbitrarily removed for a particular pre-set model of the common good and it is a very short step from this to requisitioning labour (conscription) or even, in very extreme circumstances, incarceration or murder – for the wider good. It is an attitude of mind.

    Let us return to the ‘disease’ issue where we have excellent institutions like the CDC in the US and where international co-operation on existential threats is wholly advisable but let us be careful not to fall into the technocratic trap here. We must distinguish between external existential threats to humanity and threats to parts of humanity arising from itself. How do we deal with two very different sets of threat which these intellectuqals jumble into one systemic model.

    First, authority is perfectly happy to step in with radical action after an event but it declines to put in the firebreaks (controls over migration from high threat areas, fast management of air traffic, systemic border controls) because it has a prior interest in other things – maximising of global profit for itself as system, above all. It certainly fails to educate the public on risks from the very top. In other words, it has set up the system to uphold a superficial freedom but employs the assertion of arbitrary and tyrannical action by its very nature as a total – that is totalitarian – system. This is the core of American and Euro-federalism.

    Second, the necessary collective action based on co-ordination is treated as an all or nothing related to all harms – including harms that faith-based and other campaigning groups construct as harms through propaganda – rather than to existential harms that we can all agree upon. The totalising system expands from traditional state protection to something very different, the system as instrumental in promoting values and particular policy choices derived from sub-elites within itself. In other words it moves from vehicle of security based on class to an imperial system based in unevidenced ‘values’.

    Existential threats can be looked at rationally at a global level – pandemic, asteroid strikes and so on – or at a regional or national or local level (which takes us back to the well made subsidiarity point) but the totalitarian globalisation system does not differentiate between these levels. It seeks to construct a global governance system based on ‘values’ as a precursor to these claims about handling ‘existential threats’ that a) could be handled in a more collaborative way between sovereign entities with firebreaks and b) are not actually, in many cases, existential threats at the global or even regional level at all.

    On the contrary, small failures within the system are painful but they are educative and adaptive for a total system made of many competing parts that are organically linked, whereas one technocratic global governance system is fire-fighting and damping down adaptation but eventually results in the probability (as we have seen in each successive economic crisis) of a major unmanageable and possibly existential failure because intellectuals, professors, engineers and technocrats (and their political allies) are simply not knowledgeable or competent enough to do more than they have done in Cyprus, i.e. accrue power.

    The ‘disease’ issue (like the asteroid issue) is different in quality (since they are threats that come from outside the human system) from threats that emerge from within the human system. Threats that emerge from within the human system require something that we have foolishly abandoned – self determination of persons within self-determined localities with power diminishing up the line except in relation to existential threats – proven ones, not lobbied-for ones like ‘climate change’ which actually threaten some but not all. We must encourage not defiance of markets and nature but adaptation.

    And adaptation comes from competitive example within sets of rules that are existentially effective … and not from global governance which will drive the best who have evolved (in terms of self determination) further down to the level of the average, a situation to which the technocrats aspire because the total system requires something that is simplified in order to be managed better by ‘guardians’ who are, in fact, no brighter or better than we are.

    Comment by Tim Pendry — 23 March 2013 @ 2:04 pm


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