Global governance challenge: Efficiency and Effectivness

By Shahab Sabahi – Energy and Environment for Development – Research Group

Along with the advent of globalization, climate change, sustainable development, and etc., public policy scholars have recognized the problems associated with horizontal policy integration (cross-cutting). Horizontal policy integration is understood as balancing variety of public-wide objectives (e.g. economic growth, social development, distribution of wealth, environment protection). Indeed horizontal public policy integration aims to balance between interests and trade-offs of public-wide objectives. In theory, the balancing occurs when the integrated public policy maximizes (minimizes) synergies (negative impacts) of the all objectives.

Traditionally, the policy formulation was largely defined within the framework of BUREAUCRACY. Bureaucracy is the hierarchy-based model of institutional function that described by Max Weber in the 20s. It has been widely accepted as an optimal way to organize an institution in order to achieve maximum EFFICIENCY. Horizontal policy integration is (in particular under the context of sustainable development policy, global governance) a policy formulating process that is dominated by cross-administrative practices rather than high-profile political decisions (Steurer & Martinuzzi, 2007; Steurer, 2008). Therefore the efficiency of the whole system is not the sole objective of horizontal public policy. Sustainability and effectiveness of the whole system are as important as efficiency. 

The challenge of horizontal policy integration is still pressing. Against this background, new paradigms have emerged to define how cross-administration policy should be deigned. The two most popular ones are namely New Public Management (the market-oriented model that emerged in the 1980s) and New Governance (the network-centred response to the market-hype in public administration). The guiding principle of New Governance is not efficiency but effectiveness (Jackson, 2001; Salamon, 2002; Jervis & Richards, 1997).
 
Evidently none of these paradigms effectively addresses the challenge of horizontal policy integration. Due to complexity of large integrated systems, “New Governance” faces difficult challenges. Driving forces are hard to understand and measured. Driving forces differ strongly from country to country and influenced by culture elements and value systems.  

The Polymath Paradigm

By Shahab Sabahi – Energy and Environment for Development – Research Group

Ken Jonson principle chief at Florida Tribe Cherokee Indian discussed in his recent post in social scientists portal that in history, American [even other nations] has multiple instances where polymaths helped shape and set societies apart as a contender in the world's economic and political matrix. He brought a couple of examples of the great American polymaths, such as Ben Franklin (his contributions in understanding of optometry, diplomacy, free press, invention protection, invention development, marine sciences), Thomas Jefferson (land survey standard, the college system, positive racial relations and culturally sensitive assimilation), Henry Ford who introduced mass production and marketing.  One may add more name to this list such as Nikola Tesla or more examples from other nations.

In our world today, it would appear that the polymaths are fading away. Conventional schools set to steer students away from being polymaths. Educational systems require focusing on particular discipline of sciences. Academics further polarize the issue by not allowing works from fully credentialed academics to be given credit as possible valid points of thought for consideration. Even though many academics later disprove the work of academics after massive harm has been caused (e.g., Professor DiIulio's book called " Body Count: Moral Poverty and How to Win America’s War Against Crime and Drugs).

Ken sees that the traditional system of polymath has brought more profits to humanity and society development.

Perhaps one cause could be the idea of division of labour in order to achieve maximum productivity. It curbs the development of polymaths. Nowadays being professional in one narrow field is credited the most. It may stem from the growth of complexity in sciences. Without having polymaths, the creation of ideas for growth would be halted.  The ideas those are necessary for stability of systems and are required for developing holistic definition for performance and value for systems (e.g. Society). The ideas are equally important for improving the interactions between systems.

Nowadays there is no debate on ideas as it was (capitalism vs. communism). What is hot now, debate on policies

Damping the development of polymaths could also be seen beyond the division of labour. It could stem from the fragmentation of interest groups. It keeps broad development of interest in many different fields limited, if only artificially. Those who have the larger field of view into humanity and develop that wider focus on the world do not stand out as much either with the democratization of knowledge through the prevalence of higher education being spread far and wide. There is drift between fields but to be a master of one field happens on a much higher technical level than in previous epochs. This may cause self-limiting behavior and leads to less of the polymath phenomena taking center stage.

Driving forces for socioeconomic change

Shahab Sabahi
Energy and Environment for Development – Policy Analysis Research Group

Since Herbert Spencer who submitted that society should evolve from barbarian forms to civilized forms, the debate on the causes of progress or changes in society has been heated up. From Spencer’s view as society evolves, the most capable individuals rise to the top and the least capable die out. He termed this idea on social order "survival of the fittest”.  Karl Marx took a holistic approach and synthesized sociology and economics to analyze the causes of changes in society. Marx theorized that the driving force behind social order was class conflict. Class conflict theory states that the capitalists (those who possessed resources fit to create wealth) were constantly in conflict with the proletariat (workers who do not own the means of production).

In the search for the cause of changes in society, one of the widely discussed concept was introduced by Max Weber. In his treatise "Protestant Ethics and the Spirit of Capitalism" Weber combines psychological & sociological variables with economic development. Because of its determination of the value systems of societies, he put primary importance on religion. According to Weber, the Protestant religion was a precondition for capitalistic development for two reasons: Protestant ethics led to an ascetic life style which, instead of advocating affluence, reinvested the proceeds. As well, it is the basis of rationalism and goal achievement behaviour. While a value system which motivates economic development can hardly be limited to Protestantism Weber's stress on values and the resulting motivation influenced later thought.

In more recent times, Parsons and Smelser explained economic development as a result of tension and unrest in societies. If a traditional undifferentiated society experiences economic growth and economic differentiation as a result of external inputs, this leads to unrest. Frustration of groups of the population not & participating and gaining generates further differentiation and growth, and these small steps happen within relatively short times. McClelland sees the cause of underdevelopment in the absence of achievement motivation. The desire to do well to attain an inner feeling of personal accomplishment is the pre-requisite for innovative activity. Following McClelland's concept that a level of development is correlated with achievement motivation, Hagen tried to explain why this achievement motivation varies between societies and their classes and strata. He argues that in traditional societies the status of individuals is fixed. Children learn to act according to established norms, and deviations (initiative) are punished. If by external influences a new group gains power, the status of the old elite is challenged and weakened.

Perhaps one can say that the insecurity and frustration leads to changed behaviour in society which has consequences on the family structure the basic block of society. The young generations in families tend to become dissatisfied with society’s institutions and their contradictories with readily. The young generations develop new value system or accept existing alternative value systems. In time, they become innovative personalities, if these persons become dominant groups in the society, this causes economic development. Similar phenomena may happen as far as the changing situation of marginal groups or minorities is concerned.

Quality of admirable company

Shahab Sabahi
Energy and Environment for Development – Policy Analysis Research Group

What company is the most admirable company?

Steadily creating value accounts the most important characteristic of an admirable company. By definition value is attributed to that which preserves more quality life. Now a question rises: “What features account for steadily creating values?” 

Directors and analysts count the common attributes for the most admirable companies as the quality of management / products / services, innovativeness, long term investment value, financial soundness, ability to develop people, responsibility to the community and the environment, wise use of corporate assets. (D. Anginer, University of Michigan 2008)

I believe that we can categorize these attributes in a simple way to describe better an admirable company.

Governance quality shows the most important attribute of an admired company. It is a continually evolving process. It enables a company to adapt itself when the business forces change. It brings a company quality of leadership and reputation which are the important assets that company possesses 

Formulating stable strategy comes the second. It shows the ability for the long run value creations in a company. By stable strategy, I mean a strategy that wisely elaborated based on resources capacity constraints and interests of companies with envisaging the development opportunities.

Stable strategy may require long term investments in human, knowledge and capital. Stable strategy entails effective use of company’s resources. Stable strategy leads companies to create more value options.

Integrity is an important corporate ideal. By integrity, I mean honesty, honour, and reliability. It is the firm foundation of a corporation. It is important to all stakeholders including employees, suppliers, customers, shareholders and the community. Integrity is a reflection of the professionalism and the responsible attitude of its management and employees. By corporate-wide committing to do the right values, every element of the corporation team has the freedom and of course responsibility in return to deal with each other. Integrity creates trust among stakeholders that provides a code of ethics by which the organization’s performance is consistently checked and improved over time. Integrity leads to sound collaboration, joint effort, and solidarity

Besides the fact that admired company should be a profit-making company, it also should speak to the concerns of communities. Thus in my opinion governance quality, stable strategy, integrity and profit making are the most characteristics of an admired company.

Energy Security – reconsidering endogenous energy resources development

Shahab Sabahi
Energy and Environment for Development – Policy Analysis Research Group

General notion agrees that economic growth, energy security and climate change are fundamental and interlinked challenges for the world. Having their impacts on human well-being, the clear understanding of their complex interplay has concerned both academics and public policymakers. Society’s and economics’ interest varies across countries and it implies that individual country may take on differently in addressing these interconnected issues. The common belief is that the tension of energy supply and environmental deterioration are the consequence of the economic growth. Modernized economies have long been powered by fossil energy sources. As productions and outputs have been boosted, the use of fossil energy sources has exponentially grown; it has consequently pumped more emissions to atmosphere and intensified Greenhouse Gas (GHG) emissions. Continuous fossil energy use negatively impacts the collective performance of an eco-socio-economic system which is triggered by climate change and the exhaustion of scarce fossil resources. Climate change and foreseeable rising fossil energy prices under increasing demands and increasing production and exploration costs make policymakers think over the serious use of alternative energy sources. If the scarcity of fossil energy and environment degradation are the serious threats to sustainable economic growth, it would be politically a persuasive case to see the development of renewable energy sources as an opportunity. It is a double-edge opportunity; it can cut pollutions in one hand and on the other hand can substitute for additional fossil energy demand thus economic growth remains intact. High fossil energy prices and renewable energy technology advancements will accelerate the substitution process as renewable energy becomes highly competitive and economically feasible.  

Free pollutions from fossil energy use and conventional energy technology lock-in are regarded as the market failures which need policy interventions. Developing endogenous renewable energy sources and other sort of clean energy seems to be a proper solution for tackling simultaneously the interconnected issues. This approach, however, requires heavy investments and changes in energy-economic systems, consumption patterns, and institutions.

 

Harmonizing interests and values: an application for international affairs

Shahab Sabahi
Energy and Environment for Development – Policy Analysis Research Group

On May 1st 2012, Janos Martonyi Hungary’s foreign minister gave a quasi-exclusive lecture in the centre for European Study, Chulalongkorn University – Thailand. How Hungary would respond to the forces from the world order shift was the main topic of his lectured. He initially outlined the current world’s powers structure and analyzed the possible shapes of the world structure through evolutionary process. Although he tried to not speculate the future, he ended the lecture with contemplating the possible positions of Hungary in the new world order and supported his hypothesises with the effect of Hungary’s recent foreign policies in regional and national level.

“Value-Based Foreign Policy” was the core of Hungary’s doctrine, Dr. Martonyi’s pointed out. By the “Value-Based Foreign Policy”, he meant that Hungary’s goals would not be selected on an ad hoc basis, but would be a function of the important value sources such as the UN Charter, the North Atlantic Treaty, the Treaty on the European Union and of course Hungary’s constitution.

Commitments are the prime source of values. As the definition suggests, a value-based approach requires policies are formulated within the framework of commitments made at the first place. As the number of commitments rises, policy choices become narrow.

It raises a question and I got it for Mr. Martonyi. How does Hungary harmonize her national interests and values if there would be a conflict between them? Today it is the case of the European Union, from Greece, Italy to Spain. As a competent politician, he answered my question that the value based approach, in the realm of foreign policy,  should not inherently limit Hungary’s relations with countries that do not fully respect the values her country adhere to. He continued that the competition between values and interests would be a perpetual challenge for societies. In effect it means that policy choice again remains a contextual, and values except core values such as human rights, can be altered.     

Concerning international relations, it would be an easy task to rhetorically speak on an international objective, but adopting a collective policy to reach that objective would be hard. Individual nation’s interests and contexts influence nation’s response to policies. Certainly the social structures and relations are manmade and the values (again except the core values such as human rights) are open to reasoned critique about what is the most reasonable to do. Should a commitment to manmade values be treated in completely contextual terms? Or should interests and values be harmonized before thinking about commitments?     

To harmonize interests and values, general practice is to run a pros and cons analysis which is conforming to rationality and reality of the relevant circumstances. If there would not be institutional humps, this approach creates value based interests which would be an optimistic outcome.  Priorities and institutions may cause deeper interests and values divergence which jeopardize the success of the harmonization process.  In fact, commitments beyond the core values, unlike options, bound the ability of adaptation and decrease the resilience level.

So a value-based policy is only a catchphrase, if one misses to recognize the origin of values. It reminds me this quote “G. Kennan believed that language helped make policy and that vague, expansive language would lead to vague, expansive policy” (Ideas Man by Nicholas Thompson)  

Loser and Winner in the game of change

Shahab Sabahi
Energy and Environment for Development – Policy Analysis Research Group

One of the recent discussions in the Strategic Planning Society brought forward the old dilemma of the change process and tries to address it however, in my view, in idealistic ways.

The discussion recognizes creation of loser and winner as the trouble of change. And it builds its premises based on this belief. I critique the discussion’s certainty and its proposition and argue that the marginal groups are driving forces of change and crucial to change’s success. The trouble appears when marginal groups become larger and more divided which is so-called polarization.         

Company boards, directors, legislators are presumed to be sane. It requires them to hurt no one when carrying out their responsibility which is to assure their systems steadily progress. Under the strain of change, they should respond, restructure, reallocate the scarce resources, and impose new regulations, to create fresh system resilience. By nature these processes rearrange resources and shatter the previous merit system. These processes create marginal forces (let’s call them winner and loser). The marginal forces are critical in the process of change. Both marginal forces, upper and lower average would be supporting the change, if they remain marginal. The problem appears when a system was polarized at the first place.

After the demise of communist and followed strong conductivity in the world, a polar-free world would be expected. Contrary, all systems are now thoroughly polarized and the question is WHY? (Foreign Affair Jan Feb 2012)

Polarization creates the sense of winner and loser in systems, and it should be addressed   

 In the context when change is inevitable, scarce resources, priority setting comes first. (the dilemma of judgment). What guides one’s decision making process is the principle of economic efficiency and cost-benefit analysis. Efficiency does not speak about distribution. However welfare economic theory posits grounds for working out distribution issue. In the case of change, in the race between efficiency and redistribution efficiency must triumph. In fact winners do not outnumber losers but they organized efficiently and share strong and clear interests along with compromise wherever it is needed (Mancur Oslon)